March Truck Sales Rise 33%

U.S. truck makers sold 17,308 Class 8 trucks in March, a 33% increase from the same month last year, but the news comes as several potentially troubling signs have appeared.

Following a third-straight month of declining orders in March, Kenworth Truck Co. last week announced a round of factory layoffs, and Volvo Trucks said there would be temporary downtime at its lone U.S. truck plant.

WardsAuto.com said April 11 that heavy-duty sales for the year’s first quarter totaled 46,845, a 46.6% increase compared with the first three months of 2011.

However, net Class 8 orders in North America during March were about 20,000, a 31% drop compared with the previous March (4-9, p. 1).

The chairman of the American Truck Dealers said the decline in new truck orders continued into April and was a worrisome development.

“I am concerned about this now because three months starts to be a trend,” Richard Witcher told Transport Topics. “Orders are off, and lead times from order to delivery have been shortening for most manufacturers.”

Witcher, CEO of Minuteman Trucks, an International Trucks dealership in Walpole, Mass., said manufacturers’ “memories are all too vivid about the difficulties they had in the last drop-off in sales in 2007, and they don’t want to get struck again.”

Kenworth announced last week it would lay off 10% of its workforce at its Chillicothe, Ohio, plant.

“We gave the workers three days’ notice on the layoffs, which will go into effect” April 16, Kenworth spokesman Jeff Parietti said.

“The reason is the decline in new truck orders,” Parietti added. “That plant makes our Class 8 trucks: the T660, T800, T700 and the W900 are the main models assembled there.”

Ann Duignan, an analyst at J.P. Morgan Securities, wrote in an April 11 advisory to investors that the plant employs between 2,000 and 2,500 people.

The layoffs “could be an early indication the industry ramped up production in anticipation of higher demand and is now simply ‘rightsizing’ its employment levels to match the somewhat tepid demand that is now materializing,” Duignan wrote.

Also last week, Volvo said it will adjust scheduling at its New River Valley plant in Dublin, Va.

“We’ve advised our NRV plant employees that we will take temporary down weeks the weeks of April 30th and June 4th,” spokesman Brandon Borgna said. “These down weeks are part of our production plan for the year, and are being taken for scheduling reasons, to smooth out production and maintain a consistent build rate. Orders are in line with our expectations.”

Freightliner Trucks, DTNA’s main truck brand, kept its hold on first place in the Class 8 U.S. market with 5,023 sales in March, for 29% of the market, Ward’s said. The figure is a slender 0.8% increase from Freightliner’s year-ago tally.

“While March was a softer retail sales month than expected, we see continuing, pent-up replacement demand in the market, which we believe will be realized over the next two years,” said David Hames, general manager for marketing and strategy for Daimler Trucks North America.

Meanwhile, Navistar sold 3,086 trucks, up 27.3% from last March. The company said it has not announced any layoffs, and declined further comment on March sales figures.

Volvo was third with 2,915 heavy trucks sold for the month, up 76.3% from last year.

The two brands of Paccar Inc. were next, with Kenworth at 2,396 vehicles for the month, up 59%, and Peterbilt at 2,340, up 74%.

Mack Trucks came in sixth for the month, selling 1,365 big trucks, up 40.3%.

Mack, also a part of Volvo Group, said it had no plans to cut back its workforce.

“Our sales were up more than 40% both for the month and for the quarter, primarily due to the continued strong performance of our highway vehicles and powertrains,” said Mack spokesman John Walsh. “We’re continuing to see smaller regional fleets come back into the market.”

Western Star, DTNA’s severe-duty brand, sold 182 trucks, up 48% from last March.

Though concerned, several truck dealers said that their outlook remained positive.

“Our quote activity is still good, but we are seeing a definite decrease in actual orders,” Jim Hartman, principal of Truck Enterprises Inc., a Kenworth dealer in Harrisonburg, Va., told TT.

He said most of his customers still had good freight volume and were making money.

“We think it’s just a temporary situation, but customers just have too much uncertainty about the economy, about whether consumer confidence will continue and they’ll buy on levels of last year,” Hartman, Kenworth’s ATD board member, said.

“I would say our order activity has been a little slower,” Tommy Earl, president of TAG Truck Center, a Freightliner and Western Star dealer in Memphis, Tenn. said. “There’s no one answer as to why. Some say they’re waiting until after the elections; others say uncertainty about the economy. We are, however, still confident.”