For Mack Trucks, 2018 was a good year. While the company’s market share declined slightly, Mack had its best year of production since 2015 and orders flew in at a double-digit clip, keeping the manufacturer’s Lower Macungie Township plant busy as it tried to keep up with demand.
But how long will the good times last? That’s always the question in the cyclical heavy-duty truck market.
Gothenburg, Sweden-based Volvo Group, Mack’s parent company, said its order intake in North America declined 24% to 14,014 vehicles in the fourth quarter. That was a result of the “2019 order book being sold out as well as activities together with dealers to secure order book quality,” the company said in a report released Jan. 30.
Much of that decline can be attributed to Volvo Trucks. Orders for Mack vehicles in North America increased 8% to 7,656 in the quarter, though that pace lagged the more-than-20% order uptick Mack reported for the full year.
It wasn’t just Volvo Group that saw orders slow.
Orders for heavy-duty trucks in North America softened to end 2018, with Americas Commercial Transportation Research Co. reporting December’s total was the lowest in 17 months. While ACT Research Co. Vice President Steve Tam noted freight demand and freight rates are growing at a lower rate than they were, he said the order deceleration is more of a reflection of the industry’s stockpile of unfilled truck orders.
A Lego version of the Anthem truck made by Mack. (Mack Trucks)
“It’s kind of hard to fill a full glass,” Tam said.
He added that there is a backlog of about 300,000 orders for not-yet-built heavy-duty trucks in the North American market.
To put that in perspective, Tam noted, a normalized North American market typically would produce about 250,000 heavy-duty trucks in a year.
Further, if a company placed a truck order today, most manufacturers wouldn’t be able to deliver a finished product until the fourth quarter of this year, Tam said.
So 2019 still will be busy, with truck manufacturers working through a hefty backlog of orders. Tam expects production to start to slow down in September or October, though he noted retail sales could hold out a little longer.
Mack is expecting 2019 to be busy for its Lower Macungie plant as the company continues to work through a backlog of orders, spokesman Christopher Heffner said in an e-mail.
Mack’s local assembly plant, which has about 2,500 employees, in early 2018 started building the Anthem, the company’s new highway truck that enabling Mack to seriously compete in the longhaul market for the first time in a long time. But so far, Mack’s heavy-duty market share in North America has declined, most recently dropping from 7.3% to 6.7% in the fourth quarter as the company grapples with continued supply chain constraints, Volvo noted in the report.
2018 Mack Anthem (John Sommers II/TT)
While Mack dealt with supply chain issues that faced the entire industry, another challenge was ramping up production of the Anthem in the midst of one of the hottest highway markets in recent history. Meanwhile, Volvo Trucks, which unveiled its redesigned longhaul VNL series truck in July 2017, recorded a market share in North America of 10.3% in the fourth quarter, up from 8.3% a year earlier.
An opportunity for Mack, Tam noted, would be if the federal government got an infrastructure bill in place. Such funds for transportation projects, such as roads, bridges and airports, would benefit Mack, which is a leader in the heavy-duty construction truck segment.
For now, Volvo Group is projecting 310,000 new heavy-duty truck registrations in North America this year, about on par with 2018 and up significantly from about 244,000 in 2017. Mack expects to grab a larger slice of that market, after making progress addressing its supply chain challenges, Heffner noted.
“Mack is still strong in our core segments, and we have now worked through the production ramp-up for the Anthem model,” he said. “We feel we’ve hit our stride and plan to grow our market share in 2019.”
Mack delivered 23,520 trucks worldwide in 2018, which easily outpaced its total from 2017.