Editorial: Truck Orders Are Booming, and So Is Pre-Buy

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lass 8 truck orders in North America are off to a galloping start in 2006, with January’s total reaching an all-time monthly high of 43,100 units. (Click here for news story.)

According to preliminary January data provided by ACT Research, this total exceeded by 7% the old monthly record set in November 2004.

The latest numbers coincide with the predictions of many industry analysts that truck sales this year are likely to set a new record. Last year’s U.S. sales of heavy-duty tractors reached 252,792, second in history only to 1999’s record of 262,316.

So there can be no doubt that the long-rumored pre-buy has begun, as fleets maneuver to avoid having to purchase the early models that truck and engine makers will produce to meet new federal emission rules come next January.

All truck makers shared in last month’s boom, and representatives of most of them acknowledged that pre-buying is under way. Spokesmen said large fleets began their buying spree in late 2005, and that small- and medium-sized fleets were now joining in.

One truck maker said orders would be even higher in February, showing the pre-buy “in full swing.”

Analysts predicted that all available production slots for 2006 models would likely be filled by the middle of year, which could well lead to a later slump in orders. There are widespread expectations of a sharp falloff in truck sales when the new models are introduced in 2007.

Fleets are buying as many existing trucks as they can get their hands on to avoid the price increases that are coming with the ’07 models, and to avoid the uncertainties that come with new technology.

While manufacturers have said the engines will build on today’s versions, the trucks will include diesel particulate filters for the first time ever and will need larger cooling systems to keep temperatures down.

Most of the problems fleets encountered when current engines were introduced in 2002 came with the earliest versions of those models. Truck and engine makers ended up retrofitting thousands of those units for their customers.

Even though North America’s truck and engine makers desire an orderly market that allows reasonable, steady growth, only a booming economy is likely to save them from another boom-and-bust cycle.

Indeed, by the time the truck and engine market settles down, probably some time in mid-2008, we’ll undoubtedly all be worrying about the pre-buy we can already anticipate before the 2010 models are introduced — again because of tightening federal emission standards.

This editorial appears in the Feb. 13 print edition of Transport Topics. Subscribe today.