Heavy-Duty Truck Sales Decline for 10th Consecutive Month

This story appears in the Nov. 23 print edition of Transport Topics.

U.S. Class 8 truck sales in October were 29.6% lower than year-ago levels, marking the 10th straight month this year that sales have trailed 2008’s results, according to data from WardsAuto.com.

However, some truck manufacturers, analysts and dealers said that signs of an improving economy and October’s orders pointed to a healthier truck market in coming months.

“There is no doubt that the 8,500 figure [reached in October] represents a strong performance from where the business has been tracking, and I believe it is an indication of the continued im-provement in the business environment,” Gary Meteer, senior account director for R.L. Polk & Co., which tracks truck registrations, told Transport Topics.

Orders for Class 8 trucks surged to nearly 22,000 units in October, ACT Research Co. and FTR Research reported earlier this month (click here for previous story).

Kenny Vieth, partner and senior analyst with ACT, said, “The sharp spike in orders and the near-term placement of a majority of the orders is a clear indication of pre-buy activity in the United States and Canada.” Fleets face higher costs for new trucks in 2010 because of new federal emissions rules and some are placing orders for 2009 models now to avoid the higher prices and new technology.

In a Nov. 17 statement, Vieth said, “Mexico and non-NAFTA export markets also had stronger orders, likely indicating increased confidence in the economic outlook.”

Truck manufacturers agreed.

“Even though market conditions remain difficult, North America appears to have reached a bottom, and there are signs of an economic recovery in the U.S.,” Volvo Trucks North America spokesman James McNamara told TT.

John Walsh, spokesman for Mack Trucks Inc., said, “There are indications of an improving economic climate in the U.S.”

Steve Tam, vice president of ACT’s commercial vehicle sector, said that because truck producers planned for very low orders this year and early in 2010, they already sold out their production slots for the fourth quarter, and still had “only 12,000 slots left for the first quarter” of 2010.

Dealers also were more optimistic.

“For October, we saw an increased level of new truck quote activity,” James Hartman, president of Truck Enterprises Inc. in Harrisonburg, Va., told TT. “We had improved truck sales, not significantly, but still improved. We’ve also reduced our backlog somewhat.”

Hartman said he has “definitely seen a rise in pre-buy interest by customers who have requested a quote on the cheaper ’07 engine technology, but haven’t made a decision.” The new technology will add $6,000 to $10,000 to the cost of all 2010 Class 8 trucks.

A Freightliner dealer said that buyers’ fears about the new engines have fallen considerably. “There has been a pickup in orders for both the rest of this year and into the first quarter of 2010,” Mark Lamont, general sales manager of Dallas Freightliner Western Star, Dallas, told TT.

“While it’s true that most have been buying the cheaper ’07 engines, we do have people who have said they wanted to order the 2010 technology engines because of the good things they’ve heard about them.”

Year-to-date figures for the first 10 months of 2009 total 74,380 Class 8s sold, down 32.5%, or 110,228 units from the same 10 months last year — which itself was a down year — Ward’s said. In the record sales year of 2006, 235,007 Class 8s were sold through October.

Navistar Inc.’s International Trucks was the market leader in October, selling 2,606 Class 8s for a 30.7% market share. Daimler Trucks North America’s Freightliner brand sold 2,166 units for 25.5% of the market and second place.

For the year to date, International sold 21,436 Class 8 trucks, down 19% from last year but good enough for first place with 28.8% of the market, up from 24% last year.

Mark Lampert, DTNA’s senior vice president of sales, said the sales pattern was different from the 2006 pre-buy boom.

“What we’re seeing is that carriers are buying the last quantities of EPA ’07 engines,” Lampert told TT. “This is not a pre-buy as it was in 2006; customers are not adding to their fleets. Rather, they are replacing their oldest units. In effect, they are swapping out the old inventory for new and parking these units until business de-mands increase.”

Daimler’s Sterling, which is being discontinued, sold 76 trucks and Western Star sold 52 units. Four other small makers sold four trucks.

Freightliner sold 19,430 units through October, down 30.4% from last year but with 26.1% of the market this year.

Paccar Inc.’s brands came in third and fourth, with Peterbilt Motors Co. selling 1,222 units for 14.4% of the market; and Kenworth Truck Co. selling 1,037 Class 8s for 12.2%.

Mack sold 703 Class 8s for 8.3% of the market, and Volvo moved 634 units for a 7.5% share.