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April 25, 2018 11:15 AM, EDT

Orders Rise, but Market Share Falls for Mack Trucks in First Quarter

Steve Byrne/Flickr

Everybody knows about the up-and-down, cyclical nature of the heavy-duty truck market. But as Mack Trucks proved in the first quarter, sometimes you can be up — and down — at the same time.

First, the up: Mack’s worldwide net order intake increased 59% in the first quarter, while its deliveries went up 26%, according to a first-quarter report released April 24 by Mack’s parent company, Sweden-based Volvo Group.

But then, the down: The truck maker’s market share in North America declined from 8.9% to 6.5%.

RELATED: Mack cites comeback of longhaul market in 2018

The decline reflects “the decrease in production output in conjunction with the transition to the new truck models,” Volvo said in the report.

Mack’s 2,400-worker assembly plant in Lower Macungie Township, Pa., earlier this year started building the company’s new highway truck called Anthem. Mack spokesman Christopher Heffner did not immediately respond to e-mails and calls seeking further explanation as to why production output declined, but the company was ramping up to full production of the Anthem in the first quarter.

In addition, while Mack logged significant increases in orders and deliveries during the quarter, it still lagged its sister company, Volvo Trucks, in the North American market.

Consider:

While Mack’s net order intake in North America increased 64% from 5,703 to 9,335, Volvo Trucks had a 147% jump in orders, from 5,596 to 13,815.

Mack delivered 4,591 trucks in North America during the first quarter, a 30% jump from 3,530 a year ago. Meanwhile, Volvo Trucks delivered 7,454 trucks in North America, up 114% from 3,484 in the year-earlier period.

In addition, while Mack’s market share in North America declined, Volvo Trucks’ share jumped to 10.2% as of March, up from 9.4% a year ago.

Volvo Trucks also unveiled its refined VNX model last month, a truck designed for heavy-haul applications such as logging and equipment transport. It also is expected to compete with Mack in North America, though Mack is confident its Granite model positions it “for ongoing leadership in the construction segment of the market,” John Walsh, Mack’s vice president of marketing, said in a statement issued to The Morning Call last month.

Though Mack wasn’t as robust as Volvo Trucks in the first quarter, Volvo said in its report that strong order intake in North America was driven by continued demand for construction trucks and an “especially strong development in the highway segment.” Continued improvement in the economy, high demand for freight and a shortage of transport capacity has pushed freight rates up and boosted demand for highway trucks, Volvo said.

With the strong market, Volvo raised its total market forecast for retail sales of heavy-duty trucks in North America to 300,000 this year, up 20,000 from its previous estimate.

Further, an industry update dated April 3 from Stifel indicated heavy-duty net orders exceeded 40,000 units for the third consecutive month in March. While orders were up 102% year over year, Stifel also noted the March jump likely widened the heavy-duty truck backlog by 19,000 units. The market’s total backlog of 197,000 units would take about 6.8 months to work through, Stifel noted.

Volvo expects that to continue.

“Looking ahead, the strong order intake means that the supply chain constraints and associated higher costs will remain in the near term,” Volvo Group CEO Martin Lundstedt wrote in the report.

For its part, Mack appears to be looking to boost production in Lower Macungie, according to a legal notice published April 21.

The notice was issued to inform the public that the state Department of Environmental Protection intends to give plan approval to Mack for a production increase from 74 to 130 chassis per day on its spray booth and oven at the Lower Macungie plant. The notice’s publication kicked off a 30-day period during which public comments can be provided to DEP regarding the project.

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