April 23, 2007 7:50 AM, EDT

Class 8 Truck Sales Plunge in March

First-Quarter Results Down 22%

By Jonathan S. Reiskin, Associate News Editor
This story appears in the April 23 print edition of Transport Topics. Click here to subscribe today.

The collapse in heavy-duty U.S. truck sales accelerated in March, dropping nearly 38% from the same month in 2006. For the first quarter, the industry is down 22%, according to the latest monthly survey from Ward’s Communications.
The much-predicted sales bust this year — the aftermath of the record-setting 2006 pre-buy boom — could well get worse before bottoming out as a study of orders placed for new Class 8 trucks shows a 73% plunge in March, compared with the same month last year.
The year started out with monthly Class 8 sales slipping by 3.5% in January and 19.3% in February (3-19, p. 1).
“I think it is safe to say [sales] will be somewhere around 35% to 40% lower than last year,” Paul Vikner, chief executive officer of Mack Trucks, said in an April 14 speech to the American Truck Dealers in San Diego.
Vikner also said he expects a modest improvement in 2008 sales and the risk of a significant pre-buy in 2009 ahead of the 2010 change in federal emission regulations for diesel engines.
Roy Wiley, a spokesman for International Truck and Engine Corp., said of the monthly sales results, “That’s about what we said would happen. There are really no surprises here, but we’re still anticipating a second-half pickup in sales in August or so. There’s nothing to indicate that won’t happen.”
The survey by Ward’s, of Southfield, Mich., said original equipment manufacturers sold 16,090 Class 8 vehicles in March, a 37.9% decline from the 25,895 retailed during the same month in 2006. Cumulatively, OEMs moved 51,116 units for the first quarter, down from 65,523 the year before.
Volvo Trucks North America, a sister company to Mack, tied for the “best” performance by losing only 26.3% of March 2006 sales, falling to 1,964 units from 2,666.
Scott Kress, Volvo’s senior vice president for sales and marketing, said the results reflect “the continued success of our dealers in serving their local customers, by sales out of their inventory.
“It also reflects demand for trucks with ’04 engines, as Volvo built out its backlog of orders for trucks with pre-’07 engines during the first quarter,” he said. “Production has now transitioned to trucks with ’07 engines.”
Trucks built before Jan. 1 had engines that met the Environmental Protection Agency’s 2004 standards.
Kress did not share International’s certainty about a second-half sales rebound, saying that “the second half of the year remains difficult to assess.”
Peter Nesvold, who follows trucking equipment manufacturers for Bear, Stearns & Co., wrote to clients on April 18, saying that ACT Research found that orders for new trucks plummeted by 73% in March, compared to March last year. In February, orders fell by 69%, year-over-year, he said.
Looking at the activity Volvo does have, Kress said that “most customers are buying replacement trucks. There is very little fleet expansion, although the leasing market remains steady.”
In contrast to Volvo, Mack experienced the most severe contraction in sales, losing 54.4% of its March 2006 volume and falling to 1,344 heavy trucks from 2,949.
Sterling and Western Star Trucks, both units of Freightliner LLC, were the other two OEMs to lose less than 30% of monthly sales.
Sterling sold 1,159 Class 8 models, down 26.7% from 1,582 in March 2006, and Western Star moved 232 units, down 26.3% from 315 a year ago.
International lost almost half of its monthly sales, moving 2,519 trucks, down 47.4% from 4,788 in March 2006.
The three manufacturers with results closest to the industry average were Freightliner Trucks, the nation’s market-share leader, and the two Paccar Inc. nameplates — Peterbilt Motors and Kenworth Trucks.
Freightliner, which will unveil a new line of trucks in Charlotte, N.C., early next month, saw sales fall 36% to 4,816 units from 7,529 a year ago.
Peterbilt had a 33.3% monthly loss to 2,023 units from 3,032, and Kenworth dropped 32.7% in March to 1,977 from 2,936 a year ago.
Looking at the longer term, Stu MacKay, a Lombard, Ill., consultant, said that, barring a significant downturn in the economy, total truck sales from the start of 2006 through the end of 2009 will be 940,000 units.
The only real question, he said, is which month or which quarter will have more sales or fewer. “It’s not ‘if’ but ‘when’ these trucks will be sold,” McKay said at the American Truck Dealers’ meeting in San Diego.
News Editor Neil Abt contributed to this story from San Diego.