Editorial: Truck Sales Continue Their Torrid Pace

Click here to write a Letter to the Editor.

ales of heavy-duty trucks in the United States during 2004 exceeded 200,000 for the fourth time in history, proof that the industry has recovered from the recession that ravaged it beginning in 2001.

And every indication is that the truck and component makers are expecting this year to be substantially better. It may be 30% better for some component makers and 20% higher for truck manufacturers, according to stories in this week’s issue.

The capper for last year was the December sales total, which was 44.5% higher than during the last month of 2003, and the busiest month for the nation’s truck makers since March 2000.

How good the news of higher sales volume is for trucking is still unclear. It’s difficult to determine how much of the buying spree is related to replacing trucks kept in service for extra years because of changing emission rules; how much is being caused by fleet expansion; and how much may be part of a strategy to minimize buying when the next federal emission rules become operative in 2007.

Some analysts have warned that fleets are growing and may be nearing overcapacity in the less-than-truckload market. However, another researcher told Transport Topics last week that 2004’s brisk sales pace was driven by a widespread desire by fleets to avoid having to buy the 2007 engines that are designed to meet the new pollution rules.

“Most fleet managers would like to enter 2007 with as young a fleet as possible,” said Eli Lustgarten, the director of equity research for J.B. Hanauer & Co.

While perhaps understandable, in light of the fiasco that surrounded introduction of the current types of engines in 2002, if Lustgarten is right another major pre-buy could be in the making.

This would lead to another boom-and-bust cycle, which the original equipment manufacturers have already warned could take a major toll on them.

Indeed, all of the OEMs refrained from making brick-and-mortar expansions last year, even as sales soared and forecasts rose even higher.

The truck makers are justifiably concerned that they’ll get caught with far too much capacity if they expand again, as they did after the earlier record-setting years of 1998, 1999 and 2000.

Clearly, fleets, truck makers and the nation’s environment would be served by the government’s creation of tax incentives to spur trucking fleets to buy the new engines when they become available in 2007.

But, as the latest truck sales numbers so ably demonstrate, time is running out.

This story appeared in the Jan. 24 print edition of Transport Topics. Subscribe today.

12451