Capital Equipment News January 2021

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More than 77% of new Scania trucks in South Africa were sold with a maintenance or R&M contract in 2019.

Scania's projections point towards a truck market rebound in 2021 Having been at the helm of Scania Southern Africa since November 2019, MD Fabio Souza gives Capital Equipment News his high-level assessment of the local truck and bus market, writes Munesu Shoko .

W hen Fabio Souza took over as MD of Scania Southern Africa just over a year ago, it was his first time in South Africa. In a one-on-one with Capital Equipment News , he concedes that before arriving in the local market, he wasn’t expecting to encounter a market as mature as he found in place. One of the key indicators of the mature nature of the local market, he says, is that trucks running on the country’s roads are fairly new, which is something different to Souza’s previous experience in Latin America. “Additionally, customers here are more focused on the transport side of their business – which is their core – than the truck itself. They are more concerned about providing a good service to their own customers and therefore expect the original equipment manufacturer (OEM) to provide them with a total solution to keep their trucks on the road. It’s not just about selling trucks and buses for OEMs operating in the local market, it’s about providing service, finance, insurance, repair and maintenance (R&M) contracts and buy-back options, to mention a few key services,” he says. To provide context, Souza notes that

Scania Southern Africa has enjoyed huge market penetration of its R&M contracts, which is clearly one of the key characteristics of a mature market. More than 77% of new Scania trucks in South Africa were sold with a maintenance or R&M contract in 2019, and 74% in southern Africa. A record 44% of buses in South Africa in 2019 were sold with a maintenance plan. “This is the same way they operate in mature markets such as Europe; it’s a norm that trucks are sold with a maintenance contract because the customer is not concerned about the nitty-gritty of running a truck. All they are concerned about is keeping the vehicle running,” says Souza. Another observation Souza has made is that local transporters don’t run high mileages on their trucks. The average mileage, based on the 13 000 connected vehicles Scania Southern Africa has in the market, is 10 000 km per month. “There are, however, some segments of the industry where transporters run in excess of 20 000 km, but on average our local customers run 10 000 km per month. Unfortunately, with reduced mileage, customers don't realise the full benefits of running a premium product like Scania. Generally, the more the premium asset

is utilised, the more the benefits for the customer, especially as far as fuel efficiency is concerned. Another important observation Souza has made is the world-class nature of the road infrastructure in South Africa, which positively impacts transport customers. “I had the opportunity to drive around the country and I was impressed by the spectacular roads that I saw. Such world- class infrastructure gives our customers a good opportunity to provide a good service to their own customers, which is critical to the growth of their businesses,” says Souza. On the other hand, Souza highlights the struggles faced by cross-border transport companies. Border delays in southern Africa, depending on where you are going, can stretch to days, if not weeks, due to the cumbersome customs and border-crossing procedures. This, he says, also has a significant impact on the mileage that transporters travel per month. Resilient market Commenting on the state of the market in southern Africa, Souza notes the truck and bus markets have been fairly resilient, despite the current COVID-19

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CAPITAL EQUIPMENT NEWS JANUARY 2021