October 24, 2016 4:00 AM, EDT

US Truck Sales Fall 28.6%

Vocationals Post Gains as Other Sectors Slide
John Sommers II for TT

This story appears in the Oct. 24 print edition of Transport Topics.

U.S. retail sales of Class 8 trucks sank 28.6% in September, even as the vocational segment showed strength and leasing companies anticipated adding trucks, reported.

Sales reached 14,968, compared with 20,972 a year earlier, as all truck manufacturers posted declines, Ward’s said.

Through the first nine months, sales are down 21.1% to 149,473, compared with 189,541 in the 2015 period.

“You can’t argue with the arithmetic; sales are down,” Robert Dieli, an economist with research firm MacKay & Co., told Transport Topics, but for different reasons at different truck manufacturers.

“We have been spending a lot of time with the dynamic inside the market,” he said. “I don’t think we have a unified truck market anymore. It matters a lot which [manufacturer’s] Class 8 sales you look at … and we have a metric problem as to what you want to use as your benchmark.”

Meanwhile, there is general concern about the economy in 2017. “When uncertainty rises, as it is now, we often see an increase in leasing. And when you are dealing with leasing customers, you’re going to be talking about new trucks,” said Jake Jacoby, CEO of the Truck Renting and Leasing Association.

“So I would predict that, while the overall Class 8 market will remain down compared to 2012-2015 and stay close to 2016 numbers, Trala members likely will take a slightly larger share of the Class 8 marketplace,” he said.

At Tri State Truck Center in Shrewsbury, Massachusetts, “Customers are very focused on safety and maintenance savings,” Sales Manager Chris Marsh said.

Tri State sells Freightliner and Western Star trucks, both brands of Daimler Trucks North America.

While fleets based in his area still are generating “activity,” Marsh said, “In addition to fleets, we also continue to focus on the vocational Class 8 buyer who comes home every day — heavy haul and construction firms. Their business remains strong; their demand for product is still strong.”

Vocational truck sales year-to-date are 42,517, up 2% compared with 41,838 through September 2015, Steve Tam, commercial vehicle sector vice president at ACT Research Co., told TT.

He said ACT receives sales data from the truck manufacturers, and it forecasts vocational truck sales to increase 5% in 2017 over 2016.

For the entire Class 8 market, Freightliner remained the market leader with 5,131 sales, down 36.1% year-over-year but good enough for a 34.3% share. Western Star, the smallest truck maker, sold 333 vehicles, or 42 less than a year earlier, earning a 2.2% share.

Freightliner and International Truck, a unit of Navistar Inc., are counting on new trucks introduced recently to attract over-the-road customers with their Cascadia (redesigned for the first time since its introduction in 2007) and LT models, respectively, according to analyst Michael Baudendistel of Stifel, Nicolaus & Co.

In an investor note, Baudendistel wrote Navistar’s sales pitch is built around a “driver first” concept. “The basic, and obvious, theory is that trucking companies won’t buy a truck drivers don’t want to drive.”

Freightliner chose the “total cost of ownership” approach, but its strategy and International’s “may not be so different,” Baudendistel wrote. In September, International saw sales fall 29.8% to 1,608 trucks earning it a 10.7% share.

However, its N13 engine for LT trucks will be available in April, and that will allow it “to again court customers who prefer the smaller displacement engine,” he wrote.

Kenworth Truck Co. posted sales of 2,791, down 17.5% from a year earlier and good for an 18.6% share.

“The interesting thing in California is the vocational side is still pretty strong,” said Tom Bertolino, dealer principal at NorCal Kenworth in Sacramento. “Agriculture was very good this year. It should be a good year again next year.”

Peterbilt Motors Co. claimed a 14.4% share with 2,152 sales, down 23.5% year-over-year.

Kenworth and Peterbilt are brands of Paccar Inc.

Neil Frohnapple, an analyst with Longbow Research, wrote in an investor note that in his survey of contacts within Paccar’s dealer network, “A few dealers expect a decline in vocational truck sales next year due to an anticipated slowdown in replacement demand from municipalities and construction firms.”

Volvo Trucks North America earned a 10.4% share on sales of 1,557 trucks, off 31.5% from a year earlier.

Mack Trucks saw sales fall 24.2% to 1,372, earning a 9.2% share.

VTNA and Mack, brands of Volvo Group, expect conditions to remain disappointing in 2016 and 2017, then improve in 2018, they said earlier in October at American Trucking Associations’ Management Conference & Exhibition.