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September 24, 2007 8:00 AM, EDT

Truck Sales Plunge 58.9% in August

Month Is First Below 10,000 Since 2003
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Sept. 24 print edition of Transport Topics.

U.S. retail Class 8 truck sales continued their 2007 free fall in August, plunging 58.9% from last year, the fourth straight month sales have dropped more than 50%, Ward’s Communications said. Orders for future truck deliveries also fell sharply.
Heavy-duty truck sales have fallen by 42.5% for the first eight months of the year, compared with 2006, as fleet managers continue to shun vehicle purchases — an aftershock following last year’s pre-buy sales boom and a reflection of a soft freight market this year.
The Sept. 13 report by Ward’s, Southfield, Mich., said original equipment manufacturers sold 9,817 U.S. trucks in August, down from the 23,894 vehicles moved the year before. It was the first time since March 2003 monthly sales fell below 10,000 units.
Through Aug. 31, retail U.S. sales for the year have reached 107,176 Class 8 trucks. By that time in 2006, the busiest year on record, heavy-duty sales were 186,439 units.
“We had hoped for a turnaround during the second half of this year,” International Truck and Engine Corp. spokesman Roy Wiley said, “but now it looks like that won’t happen until further on in 2008 and ’09.”
Freightliner Trucks’ monthly sales plummeted most severely — 71.5%. As a result, International supplanted Freightliner as the most popular U.S. brand in August. On the corporate level, Paccar Inc. topped Freightliner LLC in monthly market share, with 32% versus 30%.
Federal environmental regulations involving diesel engines have been driving heavy-duty truck sales in recent years, creating slow sales at the end of 2002 and early 2003, a strong market in 2005 and 2006, and a collapse this year.
OEM executives were hesitant to predict with any precision the moment the market for big trucks will turn around.
“While the rest of 2007 remains largely uncertain, we do expect the market for our products to improve next year,” said Scott Kress, Volvo Trucks North America senior vice president of sales and marketing.
“We’re seeing growing interest among customers and are encouraged by signs of an improving freight environment in certain market segments,” Kress said. “We made a number of adjustments in our operations in anticipation of the downturn this year. Successfully managing through these cycles is a challenging but necessary part of our business.”
Kenworth Trucks General Manager Bob Christensen said his company has focused on increasing “its market share over 2006 with the successful introduction of new products that provide lower operating costs for customers.”
Specifically, Christensen cited a fuel-efficiency campaign through the introduction of its T660 model, the company’s Clean Power no-idle system and a five-month, nationwide Kenworth Clean Power Technology Tour that appeared on Capitol Hill in Washington, D.C., Sept. 19.
Stock analyst Peter Nesvold told clients of Bear, Stearns & Co.
Sept. 19 that new orders for future production fell sharply in August after making a minor rebound in July. Citing his own work and figures from ACT Research Co., Nesvold said orders placed in August for heavy-duty trucks to be delivered at a later date dropped by 25.5% year-over-year after posting a much smaller 1.8% shortfall in July.
The numbers from ACT and Nesvold show that orders for new Class 8s started dropping heavily before actual retail sales did. The contraction in orders was most violent from January through April, when they plunged by an average of 70.2% a month for those four months.
Among the eight major OEMs, Freightliner sold an even 2,000 big trucks in August, down from 7,026 during the same month in 2006. While Freightliner lost the most in sales, its sister companies — Sterling and Western Star Trucks — lost the least volume.
Sterling sold 779 Class 8s, down 41.3% from 1,327 vehicles a year ago. Western Star moved 166 units, down 43.2% from August 2006.
At Paccar, Peterbilt Motors sold 1,582 big trucks to take third place among the brands, down 52.8% from 3,354 in August 2006. Kenworth was just behind for the month, selling 1,557 heavy trucks, down 45.9% from 2,876.
International sold 2,025 Class 8s in August, down 52.8% from the 4,292 vehicles sold last year.
Within Volvo AB, VTNA sold 844 heavy trucks, down 63.4% from the 2,308 moved in August 2006. Sister company Mack Trucks sold 824 big vehicles, down 63.7% from the 2,268 trucks it sold a year ago.
For the year, Mack has lost the most sales, 53.3%, and Sterling lost the least with a 17.3% shortfall.