Sub-Sahara African market for the sale of commercial vehicles is likely to improve over 2021, Fitch Solutions suggests.

The factors include delayed COVID-19 vaccine access, higher prices of vehicles and governments’ inability to continue providing fiscal support to consumers will draw some pressure on SSA region’s vehicle sales.

Moreover, Fitch Solutions forecast SSA region’s vehicle sales to see an increase by 9.7 per cent in 2021. This development comes after a decline in sales by 23.4 percent in 2020, reaching an annual sales volume of below 885, 000 units.

In order to highlight in detail the components of the rise in commercial vehicle sales, Fitch Solutions expect passenger vehicle (PV) sales to increase by 9.8 per cent. And commercial vehicle (CV) sales to expand by 9.7 per cent.

That said, Fitch Solutions believe that there is more room for the region’s commercial vehicle sales segment. For the reason that it can experience higher sales growth rates over 2021. This is partly due to an expansion of fleets by fleet operators to get goods moving. Fleet operators will take this action since larger portion of vehicles are being tied up at ports and border crossings.

On the global level, vehicle prices are still rising as shipping rates inflation shows no signs of slowing. According to Fitch Solutions, vehicle supplies remain tight with shipping delays, vehicle component shortages and higher input costs, making the production of vehicles more expensive.

“This near-term trend together with the impact of higher unemployment and income erosion across the region’s key demand centres will result in fewer consumers in the SSA region being able to afford vehicles.”

Price to rise in importing countries of commercial vehicles

Also, weakening SSA currencies will also drive up the cost of imported vehicles, as well as imported completely knocked down (CKD) kits, Fitch solutions asserts. Apart from South Africa, the rest of SSA countries depend entirely on imported vehicles. This means that the changes in exchange rates will quickly feed through to higher vehicle prices.

Furthermore, countries such as Nigeria, Kenya, Ghana and Ethiopia which have nascent vehicle assembly operations still depend on imported CKD kits to produce vehicles. This will in turn become more expensive with weaker currencies.

These notwithstanding, Fitch Solutions believes that sale of commercial trucks in SSA have stronger growth potential.

“We believe delays at border crossings and the expected increase in infrastructure spending will lead to higher demand for commercial vehicles (CVs) in the SSA region over 2021.”

Upon this basis, demand will further gain support from the rollout of vaccines which will see more commercial vehicles. This is acquired by countries through donations or increased purchases.

Fitch Solutions note that the demand for heavy commercial vehicles will likely see the strongest initial spike. This is most likely the case as fleet operators come under increased pressure to upgrade and expand their fleets.

Accordingly, CVs region will expand by a robust 9.8% in 2021, reaching an annual sales volume of just under 250,000 units.

Following this, Fitch Solutions note that there is room for additional upside risks to commercial vehicle sales. And that is if countries in the SSA region start utilising infrastructure spending to boost employment and economic growth. This, most likely may come from public-private partnerships.