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May 19, 2014 3:00 AM, EDT

Medium-Duty Sales Up 21.3% in April to Highest Total in 6 Years, Ward’s Says

By Seth Clevenger, Staff Reporter

This story appears in the May 19 print edition of Transport Topics.

Medium-duty truck sales rose in April to the highest level in six years, WardsAuto.com reported, as pent-up replacement needs and strength in key sectors of the economy helped boost demand.

Last month’s retail sales of Classes 4-7 trucks in the United States climbed to 17,495 units, up 21.3% from 14,420 in the same month a year ago and the largest monthly total since April 2008, WardsAuto.com reported.

Sequentially, April sales rose 12.6% from the 15,542 trucks sold in March.

Steve Tam, vice president at ACT Research Co., said medium-duty truck buyers have gained enough confidence in their businesses to move forward with equipment purchases.

“I think their outlook is increasingly positive, which is ultimately what is driving the improved sales,” he said.

Although U.S. gross domestic product grew at only an estimated 0.1% rate in the first quarter, Tam described that performance as a “hiccup” partially caused by difficult weather conditions.

“Even though it looks like a soft number, I don’t think it really impacted the trucking sector to the degree one would think,” he said. “I don’t think it’s done anything to affect their confidence or their outlook on how their businesses are going to perform this year. We’re going to have a pretty good year from an economic perspective.”

Tam predicted that the construction market will continue to support higher sales in the months ahead.

“We believe we’re going to continue to see moderate growth in the housing market, which just adds to the core level of demand for the medium-duty truck segment,” he said.

Tam also pointed to automobile manufacturing as “another significant piece of the economy that’s helping to support demand.”

Through four months, buyers have purchased 57,445 medium-duty trucks, up 12.6% from the same timeframe last year.

There is a “broad-based recovery across all vocations, but a significant portion is driven by the spur in home sales and construction,” said Todd Kaufman, Ford F-Series chassis marketing manager.

He added: “Demand is also being driven by the average age of a medium-duty truck, which is 13.6 years, so replacement sales are a natural now that the U.S. economy is growing again.”

Valley Ford Truck Inc., a dealership in Cleveland, has seen broad demand for medium-duty trucks, said Andy O’Donnell, the company’s general sales manager.

“Demand continues to improve, and it’s not just any specific market,” he said. “It’s vocational, forestry, pickup and delivery, dry freight and construction. Small, medium and large fleets all seem to be in the market. There’s a lot of activity, and it’s translating to a lot of sales.”

O’Donnell said his customers are buying trucks for replacement and expansion purposes.

“Two years ago, it was mostly replacement vehicles, but I think we’re transitioning into the fleet-expansion cycle,” he said. “I think the guys who made it through the bad times have grown, and while the economy hasn’t completely recovered, it’s pretty steady right now. I think buyers have a certain level of comfort to invest in equipment and expand their fleets, where they were a little hesitant to do that in years past.”

Although overall medium-duty sales rose in April, sales of Class 7 trucks fell 9.6% from a year ago to 4,127, Ward’s said. Year-to-date, however, sales of those vehicles have edged up 1.3% to 15,298 units.

Monthly Class 6 sales, on the other hand, jumped 30.8% from a year ago, to 5,626. Sales for 2014 to date have risen 16.8% to 19,185.

Combined sales of Classes 4 and 5 trucks surged 39.4% to 7,742 in April. Year-to-date sales have climbed 17.7% to 22,962.

Most medium-duty truck makers reported higher sales volumes for the month.

Ward’s reported that Ford Motor Co. sold 6,536 Classes 4-7 trucks, a 39.1% jump from a year ago. Dodge Ram’s medium-duty sales also spiked last month, climbing 74.6% to 1,949.

Daimler Trucks North America’s Freightliner brand sold 4,092 medium-duty trucks in April, up 8.7% from a year earlier.

Ward’s also reported that Navistar Inc. sold 2,169 of its medium-duty International trucks, down 20.3% year-over-year.

Kenworth Truck Co.’s medium-duty sales rose 27.1% to 506, and sister company Peterbilt Motors Co.’s sales increased 9.8% to 426.

Isuzu’s sales nearly doubled in April to 1,470 trucks, a 95.5% gain from a year ago.

Hino sold 558 trucks, down 15.1% year-over-year, and Mitsubishi Fuso’s sales slipped 12.4% to 148 trucks.