Truck Sales Gain 2.8% in November

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Dec. 22 & 29 print edition of Transport Topics.

Strong volume increases at Freightliner and Navistar drove the expansion of U.S. heavy-duty truck sales into a sixth month during November, although for the full year, purchase levels are all but guaranteed to fall below those of 2007, according to the latest survey from WardsAuto.com.

Looking ahead, order trends for new heavy vehicles offer no evidence of rising sales, bolstering the argument that the regulatory-induced pre-buy once expected for 2009 will probably not occur. Truck dealers also said in interviews that the national meltdown of the financial industry has hindered prospective sales.

Original equipment manufacturers and their dealers sold 10,598 heavy trucks in November, a 2.8% increase from 10,309 Class 8 units moved during the same month in 2007.

Through Nov. 30, U.S. retail sales of big trucks stood at 120,706 vehicles, a 13.1% decrease from the 138,931 units moved during the same time in 2007, according to Ward’s Dec. 10 report.

“Sales are very slow, extremely slow,” said Tyler, Texas, Volvo dealer Pam Hall. “There are quotes for sales . . . but getting a signed order is very difficult. People are in ‘hold’ mode.”

“Sales are definitely down,” said Kenworth dealer Kyle Treadway of Salt Lake City. “We’re getting half the volume that we usually see this time of year.”

Navistar Inc. posted a 25.6% increase in volume for the month, with sales rising to 3,066 units, the most of any nameplate, from 2,441 a year ago. Spokesman Roy Wiley attributed the gain to the company’s International ProStar model, which he called the OEM’s “bread and butter.”

Wiley said large fleets are the primary source of demand because they usually have better access to capital.

Sales of Freightliner Trucks grew even more strongly — by 44.2% — to 2,742 units for the month from 1,901 in November 2007. After starting the year with four months of volume declines worse than the industry average, Freightliner has had six straight months of sales increases of 19% or more.

The OEM declined to comment to Transport Topics, but Frank Ellett, the Virginia-based lead Freightliner dealer within the American Truck

Dealers trade group, said that the figures did not match with his experience.

“We’re certainly not seeing it,” he said, adding that he recently met with a group of other Freightliner dealers, and none of them mentioned an increase in sales.

Freightliner’s success did not spread to its sister companies under the Daimler Trucks umbrella, according to Ward’s data.

Sterling Trucks, which will be discontinued in March, had a 31.1% decrease, the most of any brand. The company moved 438 trucks, down from 636 a year ago.

Western Star, the smallest OEM, shed 9.3% of monthly sales, dipping to 88 units from 97.

Among the four other brands, Peterbilt Motors almost broke even, losing just 1.3% of its monthly volume: to 1,190 from 1,206.

The other three — Kenworth Trucks, Mack Trucks and Volvo Trucks North America — each lost between 20.4% and 28.5%.

In October, ACT Research Co. said September’s financial chaos caused North American orders for new heavy trucks to fall off the table.

“Since then they’ve hit the floor and shattered,” said Kenny Vieth, an ACT partner and senior analyst. “This is the third straight disappointing month we’ve seen, with 11,400 new orders in November and 10,700 in October.”

Dealers mentioned financing as a crucial issue.

“There has been a dependence on financial gimmicks: no equity in trades and no money down to purchase new equipment. We’ve been robbing our natural used truck market of customers by allowing them to purchase new equipment,” said William McKenna, a Volvo dealer in Des Moines, Iowa.

“People are scrutinizing paper more carefully now . . . We’re all considering equity now, a lesson we’ve had to learn again,” he said, adding that local banks in his area “have exited truck financing as repos have reared their ugly heads.”

As a result, he has turned more toward Volvo’s in-house financing captive, which he described as more aggressive than other lenders, but still more cautious than it had been previously.

Treadway said he and other Kenworth dealers work closely with Paccar Financial, “but they are also constrained by their sources [of commercial paper].”

In his Western markets, Treadway said, customers are doing the opposite and securing more financing from local banks that are picking up the slack from the withdrawal of GE Capital, which historically has been a major player in truck financing.

Hall said that Texas banks are still financing truck sales, but are insisting on higher down-payments.

Volvo marketing executive Matt Kelly said his company “continues to offer comprehensive financing options to qualified customers through our captive finance arm, Volvo Financial Services,” and the OEM “remains committed to working with customers to meet their needs for new trucks and to evaluate the future needs of their fleets.”