U.S. Class 8 Truck Fleet Rises 3% to Four-Year High, Polk Reports

This story appears in the Dec. 2 print edition of Transport Topics.

The U.S. Class 8 truck fleet expanded to 3.63 million vehicles in the third quarter, the highest level in four years and 3% higher than a year ago, according to registration data.

The year-over-year growth rate was the highest of any quarter in the past six years, according to the R.L. Polk & Co. quarterly commercial vehicle report from IHS Automotive.

Despite that growth, the truck registration data that were released Nov. 20 continue to reflect primarily replacement of older trucks rather than significant fleet expansion, said Gary Meteer Sr., Polk’s director of aftermarket and commercial vehicle solutions.

“That doesn’t mean it’s bad,” he said. “It’s still going to be a good year. It’s just not a robust year.”

Growth of about 5% would signal more meaningful fleet expansion activity, Meteer said.

Although total trucks in operation increased, the number of new heavy-duty trucks registered for the first time slipped 2.7% during the quarter to 48,350, down from 49,710 in the third quarter of 2012, according to Polk’s data.

Meteer attributed the divergent movement of the total fleet size versus new registrations to the timing of new and used vehicle transfers.

“A used truck, depending on when its registration expires, is still a registered vehicle, albeit sitting on a used-truck lot for some period of time,” he said.

“For that period, there’s almost a double counting because the new truck comes in and goes right into service, and it takes some time for the used truck to get to a dealer that’s going to sell it. It’s a timing issue,” he added.

Class 8 registrations trailed year-ago levels in July and August but rose in September. That movement mirrored retail sales, which also declined on a year-over-year basis in July and August before posting growth in the final month of the third quarter, according to Ward’s.

For the first nine months of 2013, new Class 8 registrations fell 7.2% to 139,045, Polk said.

Dick Witcher, CEO of Minuteman Trucks, an International Truck dealer in Walpole, Mass., said he believes there has been “a little bit” of fleet expansion in his area.

“I think people are hopeful about 2014,” said Witcher, who also is chairman of American Truck Dealers.

Replacement demand also will increase as older trucks wear down, he added. “They have a finite life, and at some point we’re going to have to start replacing vehicles.”

However, buyers will need to contend with the fact that new truck prices have climbed over the past decade as manufacturers built vehicles that comply with tighter emissions regulations, Witcher said.

“Those people who have not been buying trucks along the way are going to see some real sticker shock when they go to buy replacements for their vehicles,” he said.

Brenda Dittmer, vice president at Weinrich Truck Line Inc., said all of her company’s truck purchases in 2013 were replacements.

The Hinton, Iowa-based tank truck carrier’s fleet shrunk a bit during the depths of the recession, but the company slowly grew back, she said. For the past two years, though, Weinrich’s fleet has held steady.

The lack of growth isn’t because of a scarcity of freight.

“We probably could grow more, but we are short on drivers,” Dittmer said. “I think we could easily grow three to five units with the freight that we could have available to us, but we have three or four sitting empty right now, so we can’t add more.”

The company also wants to see how government rules and regulations play out before making an investment, she added, specifically citing health-care reform and the expected electronic logging mandate.

“Right now, we’ll just maintain until we get a little bit better view of what the future holds,” Dittmer said.

Truck-dealership chain Rush Enterprises Inc. said its Class 8 retail sales in the third quarter climbed 15% over the same period in 2012.

On the company’s Oct. 23 earnings call, CEO W.M. “Rusty” Rush said there’s still some “hesitancy” among fleets given new hours-of-service changes that went into effect during the summer.

Rush said he believes that freight is “still decent,” but rates are another issue.

Fleets “have not gotten the rate increases they deserve,” given the hours-of-service issue and the rising cost of equipment because of federal emissions requirements, he said.

However, Rush added that he believes truckers will start to see those rate increases. And at that point, they may begin “looking forward to some expansion of their fleets.”

Rush also said Navistar International Corp. gained market acceptance with its new selective catalytic reduction engine strategy, leading to higher truck sales during the quarter from the dealer’s Navistar division.

The Polk report also tracked registrations of vehicles powered by alternative fuels.

In the first nine months of 2013, a total of 3,175 compressed natural gas engines were installed at the factory in Classes 4-8 vehicles and an additional 1,645 propane engines were installed in Class 7 vehicles.