Size of Class 8 Fleet Shrinks 4.2% in 3Q; Registrations Rise Faster Through Year

The overall size of the U.S. Class 8 fleet continued its downward slide since peaking in 2008, R.L. Polk & Co. said in its latest report, which showed the number of U.S. Class 8 vehicles in operation fell 4.2% in the third quarter.

The quarterly fleet size declined from last year, even though Polk reported that registrations of new Class 8 vehicles rose 29.8% to 111,738 in the first nine months of this year, which observers said indicated that many old trucks were being scrapped.

“Fleets can scrap five trucks and buy three used trucks,” said Chris Brady, president of Commercial Motor Vehicle Consulting Corp., Manhasset, N.Y. “If you buy new, you sell 10 into the used truck market and buy seven. There are several ways to do it. At end of the day, when you replace vehicles, you’re replacing a lower number than you started with during a recession.”

Polk reported late last month that heavy-duty vehicles registered for U.S. roads totaled 3.42 million on Sept. 30, down from 3.57 million in Sept. 30, 2010, although the number of new registrations has been growing steadily this year, and some said fleets are beginning to expand, rather than simply replace old trucks.

Polk said that it counted 30,508 new Class 8 registrations in the first quarter, up 7.7% from 28,336 in the first quarter of 2010; 38,829 registrations in the second quarter, up 35.3% from 28,690 in the second quarter last year; and 42,101 in the third quarter, up 45.9% from 28,863 in the third quarter last year.

Polk’s figures show that Class 8 vehicles in operation peaked at the end of 2008, at 3.7 million units, two years after Class 8 U.S. sales hit their historic high of 284,008, according to WardsAuto.com.

“At the end of December 2010, GVW 8 vehicles in operation were 3.575 million,” Gary Meteer Sr., Polk’s account director for commercial vehicle solutions, told Transport Topics. “Therefore, the overall trend is a decline in GVW 8 vehicle population. New are replacing old units, and the older units are taken out of service.”

Brady said the reduced fleet size was consistent with economic developments.

“I would be concerned if I saw the number of trucks was higher than before the recession,” Brady told TT. “The economy is still smaller than the year before recession. We haven’t had enough growth in business sales to totally recover.”

Industry representatives blamed the recession most for the two-year lag between the highest new truck sales year and the peak of vehicles in operation.

“Dealers across the country definitely had a lot of used trucks sitting on their lots for an awful long time after 2006,” Kyle Treadway, chairman of the American Truck Dealers association, told TT.

“Following the pre-buy in 2006, there were a significant number of trucks that were parked for the duration of the recession,” David Hames, general manager for marketing and strategy at Daimler Trucks North America, told TT. “We believe that some of the falloff in registrations [of vehicles in operation] is the result of these units gradually washing out of fleets’ capacity.”

Industry representatives agreed that the increased registrations of new vehicles fit in with their data.

“Historically, high levels of replacement demand have helped the Class 8 market bounce back after a few lean years,” Ron Huibers, senior vice president of sales and marketing for Volvo Trucks North America, told TT. “We expect the replacement cycle to continue into 2012, and we are also beginning to see signals of fleet expansion.”

“In early 2011, truckload carriers led the replacement charge, but we’re now seeing [less-than-truckload] carriers increase the pace of their replacement cycle,” Huibers said.

“Random component shortages and production disruptions will continue, putting upward pressure on costs for the foreseeable future,” he added.

“Replacement demand continues to be the primary driver of new Class 8 truck sales, particularly highway tractors,” John Walsh, vice president of marketing for Mack Trucks Inc., told TT.

“In the truck dealer market, we’re starting to see our industry get sustained growth — very small growth but consistent growth in new trucks,” said Treadway, who is also president of Kenworth Sales Co., West Valley City, Utah.

“It started in one area, spread to another area and now is operating across the country,” Treadway said.

He added that, although the trucking industry also has been cyclical, dealers have had to contend with much sharper swings both ways in recent years.