Feb

Comment by Max Braun – Feb 2011

2011-02-25 17:45
Max Braun

As we welcomed the second decade of the 21st century, a generally more optimistic mood was cautiously articulated by vehicle manufacturers and importers (OEMs), trailer and body builders. Modest capital cost increases of around 2% to 3% was on the cards mainly to cover the cost creep of externalities such as power, water, rates, labour and so on rather than
currency concerns or manufacturing costs.

Trailer builders will be watching steel, timber and other material prices as they strive to achieve better selling prices to restore some level of profitability. Cost of capital remains steady at 9% and residual values at an average of 25% – residuals are now very much out of favour. The fuel price has been rising since the middle of December 2010 and will remain volatile given unstable exchange rates and crude oil prices. The increase in driver wages for 2011 were not concluded at the time of going to press. Wages are expected to go up by between 8 and 10% across the board for the industry.

The February 2011 Gauteng fuel price at R8.40 cpl, pushes fuel costs as a percentage of operating costs to 42% for a seven-axle interlink plying 200 000 kmpa.

According to some of the OEMs, maintenance costs can be expected to rise about five per cent and tyre prices 6% – 7% before the end of February. Given the level of interest expressed by many large and small fleet owners in these OCBs, it is important to keep in mind that fleet owner discounts of about 12,5%, buyback agreements, deals on related equipment and on tyres are very much part of the packages being negotiated by suppliers. Several OEMs have made their respective maintenance contract rates more competitive.

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