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November 19, 2007 7:55 AM, EST

Class 8 Truck Sales Drop 53.1% In Oct. on Weak Freight Market

By Frederick Kiel, Staff Reporter

This story appears in the Nov. 19 print edition of Transport Topics. Click here to subscribe.

Heavy-duty retail truck sales in the United States fell 53.1% in October, the sixth straight month in which sales fell 50% or more below 2006 levels, according to WardsAuto.com.

The drop extinguished lingering hopes for a rebound this year, as a weak freight market compounded the sales collapse that followed the record pace of last year, ahead of new U.S. emission rules for 2007, truck manufacturers and analysts said.

During the record Class 8 sales last year, many analysts predicted a sharp decline for the first half of 2007, but most said they expected a rebound in the second half (9-25-06, p. 1). Now, few, if any, see a recovery soon.

“We don’t know when the market will start upward dramatically. We had expected it by now, but it still has not occurred,” Roy Wiley, International Truck and Engine Corp. spokesman, told Transport Topics.

“The bulls have left the building,” Peter Nesvold, transport analyst for Bear, Stearns & Co., wrote in his Nov. 14 newsletter. “There are fewer and fewer Class 8 optimists left, and clearly our own pre-buy expectations have been coming down as the year progressed.”

Truck manufacturers sold 11,769 Class 8 tractors in October in the United States, down from 25,069 in October 2006, Wards said Nov. 12 in its monthly survey.

Monthly sales have been more than 50% below last year since May, and through the first 10 months of 2007, truck makers sold 128,622 Class 8s, compared with 235,007 for the same period last year, a drop of 45.3%, Wards said.

“The market did not come back as quickly as we had expected, but we now see the truck market being influenced by more normal economic factors, such as freight demand and industrial production, rather than by the pre-buy,” Scott Kress, senior vice president of sales and marketing, Volvo Trucks North America, told TT.

“The market for heavy-duty trucks is coming back slower than expected due to economic realities, including weakness in the freight environment and the drop-off in housing construction,” Mack Trucks spokesman John Walsh told TT.

Andreas Renschler, head of Daimler Trucks, told reporters in Stuttgart, Germany, Nov. 12 that the company now expects that a sales rebound in the United States will occur “no earlier than the end of first quarter ’08, and possibly a bit later.”

Renschler previously predicted that truck sales would begin to climb by the end of this year.

Kenny Vieth, editor of A.C.T. Research Co., which measures truck build orders and other transport data, told a Bear Stearns conference Nov. 13 that not only did he see no recovery of truck sales in 2007, ACT was lowering its forecasts for 2008 and 2009.
“There’s too many trucks chasing too little freight,” Vieth said. “Because of the pre-buy, the trucking industry had 5% too many trucks in the beginning of 2007, just as economic weakness was hitting the economy.”

In November, ACT lowered its estimate of Class 8 trucks that would be built during 2008 in North America by 40,000 to 215,000 and by 50,000 to 329,000 in 2009. “The actual builds may not fall that much, but the direction downward is correct,” Vieth said.

“Class 8 fleets still have 10,000 to 15,000 too many trucks in their inventories now,” Vieth said. “Even though orders jumped unexpectedly in October to 20,000, I don’t see a lot of big fleets who pre-bought last year putting in any significant orders yet.”

Freightliner Trucks had the largest monthly drop of any manufacturer, selling 2,396 units in October, down 65% from the 6,847 units sold last year, for a 20.4% market share in the month. Representatives of Freightliner Trucks did not return calls for comment.

Freightliner retained its spot as market leader for the year to date, selling 45,594 Class 8s for 35.4% of the market. That total represented a 30.3% drop from the 65,448 vehicles Freightliner sold in the first 10 months of 2006.

International, which took over as market leader from Freightliner in August, held onto its No. 1 spot for the third straight month by selling 2,866 Class 8s for a 24.4% share. However, its sales fell 50.7% from last October’s total of 5,812.

“We did pretty well during the month as to market share, but it was still not a good month for sales,” International’s Wiley said.

International was in second place for the year, selling 24,713 units for a 19.2% market share. International has experienced a sharper drop than Freightliner for the year to date, 45.3% less than the 45,195 tractors it sold from January through October last year.

Paccar Inc. subsidiary Peterbilt Motors sold 1,532 Class 8s in October for a 13% market share, a 52.2% decline from the 3,203 it sold a year earlier.

Kenworth Truck Co., another Paccar firm, sold 1,500 trucks for a 12.7% market share in October, 49% below the 2,943 it sold in 2006.

Two subsidiaries of Volvo AB both fell about the same percentage in October.

Volvo Trucks North America sold 1,305 vehicles for an 11.1% market share, 42.6% under the 2,274 sold last October; Mack Trucks sold 1,167 units for a market share of 9.9%, 45.8% less than the 2,155 last year.