August Class 8 Truck Sales Rise 9.2%

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Sept. 22 print edition of Transport Topics.

Heavy-duty U.S. truck sales grew for a third straight month in Au-gust, but at a still anemic rate over a weak August 2007, according to the latest monthly survey by WardsAuto.com.

Dealers said Class 8 business is slow at best and that most of last month’s sales growth was attributable to an unexplained sales jump at Freightliner.

Meanwhile, a new report from a stock analyst predicted there would be little to no pre-buy of big trucks next year before federal emission standards on diesel engines tighten in January 2010. Massive pre-buys fired truck sales for the model years before the federal standards were tightened in 2002 and 2007.

Original equipment manufacturers and their dealers sold 10,722 heavy trucks, or 9.2% more than the 9,817 units they moved last August. The Sept. 11 Ward’s report also said for the first eight months of the year sales totaled 87,164 vehicles, 18.7% below the 107,176 trucks sold in the same period last year.

Ward’s said Freightliner sold 3,135 heavy trucks in August, a 56.8% jump from August 2007. Freightliner’s increase accounted for 125.4% of the industrywide net monthly gain because five of the other seven manufacturers in the market segment sold fewer heavy trucks.

Off the record, a number of dealers said that kind of jump usually indicates a big sale to a large fleet, but Freightliner executives in the Portland, Ore., headquarters declined to comment.

Navistar Inc. also posted a strong monthly increase, selling 2,520 International trucks, 24.4% more than the 2,025 it moved last August. Other than that, truck manufacturers said sales were flat or down.

“Dealers have gotten very good at managing mediocrity,” said Jack McDevitt Jr., president of a four-location chain that sells six brands of trucks in New England. McDevitt said his volume is down by 28% from last year, and he has been paring expenses vigorously.

Volvo dealer Pam Hall of Tyler, Texas, said that even before her state was hit by Hurricane Ike, “business was very slow in our part of the country.” Several months ago, Hall said, her sales to oil field customers were strong, but now that has slowed down, as well.

Frank Ellett, president of Virginia Truck Center, which operates seven locations, said that business in his state was “slow, like the rest of the country. We’re in the doldrums.”

Although he represents Freightliner dealers within the American Truck Dealers trade group, he said he was unable to explain that manufacturer’s recent monthly surge.

Mack Trucks broke even, selling 827 heavy vehicles, just three more than it did in August 2007.

The five other major truck makers reported sales declines for the month, ranging from a 5.4% decrease for Peterbilt Motors to a 52.4% plunge for Western Star Trucks, a sister company to Freightliner within Daimler Trucks North America.

Monthly sales volume at Volvo Trucks North America was off by 13.5%; Kenworth Trucks declined 16.6%; and Sterling Trucks was down 19.3%.

Assessing Class 8 sales to come, analyst Thom Albrecht wrote to clients of Stephens Inc. Sept. 15 that his survey of 88 truckload carriers with combined annual revenue of nearly $20 billion showed fleet executives had almost no appetite for another pre-buy similar to the sales booms in 2002 and 2006, just before the Environmental Protection Agency issued tightened engine emission standards.

Among the carrier comments that Albrecht reported were:

“Even if my company’s finances experience a miraculous recovery during 2009, there is no way we will change our mind about not pre-buying.”

“I’m no fool. I’d rather face the challenge and cost of new en-gines on 25% of my tractors [assuming a four-year trade cycle] than create excess capacity that is a drag on 100% of my tractors.”

“Didn’t we learn our lesson in 2006?”

Albrecht said only 13% of respondents to his poll had decided to definitely pre-buy some of their 2010 tractors in 2009.

McDevitt, like some of the other dealers, said his new-vehicle sales also are hindered by recent, high-quality repossessions.

“I’ve got a 2006 Western Star tractor with just 350 miles on it. The original buyer parked it in his yard, couldn’t make the payments and 18 months later it was repossessed.

“That’s the most extreme case I’ve seen, but a number of repossessed tractors have incredibly low miles,” McDevitt said.

As for the current lack of sales activity, dealers blamed the torrent of bad news from the nation’s financial sector.

“We’ve entertained a number of price quotations, and that’s a good sign,” said Oscar Horton, president of Sun State International Trucks in Tampa, Fla. “But every time we get on a roll, then Fannie Mae and Freddie Mac happen, or Lehman Brothers, and that puts nervousness back into the system,” he said.

Both Hall and Ellett spoke of a “psychological effect” from the financial news.

“Buyers are waiting for the other shoe to drop,” Ellett said.

“The news about AIG [insurance] and the stock market doesn’t help us. It makes buyers considerably more careful,” Hall said.