Africa is a 1 500 unit a year market for CASE Construction Equipment
The best-selling product remains the backhoe loader for CASE in Africa, especially the 570 model.
Africa has the potential to be a more than 2 000 unit a year market for CASE Construction Equipment.
The African market as a whole represents more or less 1 500 units per year for CASE Construction Equipment.
The original equipment manufacturer has one large partner for each of the big markets such as South Africa, Kenya, Angola and Nigeria, to mention a few. The bigger dealers usually have some sub-dealers in other smaller markets.
At present, the CASE’s focus is on developing its existing dealers than appointing new ones. Our dealer development strategy entails training them in all aspects of the business, such as customer satisfaction through customisation, aftermarket service, as well as financial services.
“In good years we used to achieve in the region of 2 000 machines. We believe there is still potential for us to be bigger than that. The challenge today is that Africa is a market with the biggest number of used machines. When I say used I don’t mean five to seven-year old machines. In Africa you can get a 20-year old excavator or even a 25-year old grader still working on site,” Franco Invernizzi, senior director for Africa and Middle East at CASE Construction Equipment, tells Equipment Africa .
“However, as the continent continues to develop, the number of new machines will increase at the expense of used machines. There is still a lot of potential for Africa with all its infrastructure development targets.”
In terms of unit sales in Africa, between 75-80% of machines sold are heavy ranges and the rest is compact line. The more developed the continent will become, the more the growth for compact equipment will be realised. For example, in Europe 60% of construction machinery sales are in the compact line, and 40% are heavy liners. I believe in the next few years Africa will also move towards that direction.
“We will see many more compact loaders and excavators going into the market. The most interesting growth prospect at this point is the compact excavator. To date, we sell about 15 mini excavators per year, but I believe in the next five years that number will be 10 times bigger,” says Invernizzi.
Franco Invernizzi, senior director for Africa and Middle East at CASE Construction Equipment, believes there is potential for the OEM to further grow its African market.
From the first quarter of 2015, Africa has been under pressure due to downward commodity prices. Countries such as Nigeria and Angola have been under pressure economically due to their reliance on oil. With oil prices not promising to surpass the USD50 per barrel mark this year these economies will remain under pressure for the rest of the year. Mozambique also has big potential but most of the projects tipped to drive its economy have been stalled.
However there are some surprise packages, for example, in North Africa the company has seen better performances in Morocco, while in East Africa it has seen steady growth in Ethiopia, Tanzania, Kenya and Uganda. The rest of Africa is generally struggling. 2016 will probably be still a tough year.
In a market where mining, the major source of income for many economies, has been in dire straits and investments into infrastructure have significantly dried out, while banks have also been reluctant to finance construction equipment, CASE is pushing ranges that bring quick returns for the user of equipment, especially in South Africa. The best bargain remains the backhoe loader. CASE has always been renowned for its backhoe, which also comes at a very good price, especially when contractors are cash strapped due to constrained order books.
“With our backhoe, especially the CASE 570 model, you get a return on investment very fast, and for that reason it remains a trusted tool in the market. People can afford it. Besides our 570 backhoe loader, we are also seeing better action from the skid steer, especially our CASE SR175 model,” he says.
CASE has always been renowned for its backhoe loader product range over the years.
“It’s also not only about the machine. We are offering an in-house financing programme through our dealers. We have a better interest rate than most of the banks. The second pillar is our service package. This is part of the effort to not only sell a machine but to give the customer a total solution. The customer is only left to think about how to run his business not how to maintain and repair machines. We find this particularly effective especially when the market is this tough. This arrangement allows our customers to undertake their jobs and pay when the money comes at a later stage.”
South Africa remains the company’s biggest market in Africa. The second-biggest was Algeria but of late the country is going through a difficult period due to downward oil prices. “But, I believe that starting from the second half of this year Algeria will come back. About 30% of our African unit sales per year are generated in South Africa, especially last year, where other bigger markets such as Algeria, Angola and Nigeria were very low. “