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June 12, 2020 4:00 PM, EDT

Medium-Duty Sales Tumble 33% in May

Medium-duty DTNA truckA DTNA eM2 medium-duty truck. (Daimler Trucks North America)

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U.S. retail sales of medium-duty trucks fell across the board in May, landing below 15,000, WardsAuto.com reported — coming amid states’ uneven stay-at-home orders and the first nonessential services reopening in limited ways.

Sales of Classes 4-7 trucks in the month dropped 33.2% to 14,809 compared with 22,171 in the 2019 period.

Year-to-date, sales were 81,766, down 18.6% compared with 100,417 a year earlier. Only Classes 4-5 sales were positive in the five-month period, improving 6.3% to 43,370 compared with 40,810.

The diversity of end markets served by medium-duty trucks should continue to help blunt the severity and duration of the downturn, certainly in relation to the much more volatile heavy-duty truck market.

Dan Clark, head of BMO Transportation Finance

Dan Clark, head of BMO Transportation Finance

“The market for medium-duty trucks, which has been hit particularly hard by the shutdown of nonessential services, remains in the midst of a down cycle that we think will be sharper than the relatively modest pauses that we’ve become accustomed to,” Dan Clark, head of BMO Transportation Finance, told Transport Topics.

“That said, the diversity of end markets served by medium-duty trucks should continue to help blunt the severity and duration of the downturn, certainly in relation to the much more volatile heavy-duty truck market,” Clark said.

Class 7 sales dropped 30.2% to 3,442 compared with 4,934 a year earlier, and Class 6 plunged 60.9% to 2,898 from 7,414.

The leasing and rental business — primarily Class 6 — is “almost 50% of the entire medium-duty market, and that is still very constrained,” Navistar Inc. Chief Operating Officer Persio Lisboa said during the company’s latest earnings conference call.

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Those companies are drawing from their stock of rental units to fulfill requirements for a lease contract “instead of buying a new truck from a truck maker, like us. We haven’t seen any material recovery on leasing and rental at this point in time,” Lisboa said June 4.

International is Navistar’s truck brand. In Class 6, its sales fell to 455 compared with 2,342 a year earlier.

In Classes 4-5, industry sales fell 13.8% to 8,469 compared with 9,823 in May 2019.

Meanwhile, one analyst saw increasing changes in fuel preferences.

“Last-mile delivery companies have taken the lead in requiring alternative fuel vehicles due to their proximity to consumers, favorable economics and the enhancement of brand image,” said Andrew Wrobel, a commercial vehicle market forecaster with Rhein Associates. “That said, oil prices have plummeted, and fleets welcome the lower diesel costs, but we still see committed compressed natural gas users striving to meet corporate green initiatives with that fuel.”

Clark said accelerating growth in last-mile e-commerce during the shutdown will continue to be a much-needed lifeline for medium-duty truck demand.

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