Bruce Ewald, assistant GM for Peterbilt Motors Co., will tell you that although there are many factors behind the surge in Class 8 orders this year, the primary reason is freight, as fleets try to replace older equipment and add capacity to meet growing demand.
“What's driving this increase in Class 8 orders this year is freight. Volumes are up and that makes it easier for fleets to both expand and replace equipment,” Ewald told Fleet Owner.
Most truck OEMs agree that order boards will be strong for the remainder of 2004 and into 2005. “Orders have been super strong across the board — though no particular configuration has dominated — and remain strong for the rest of this year,” adds Tom Kelly, vp-marketing for Mack Trucks. “We also look to 2005 to be as strong as 2004.”
“Class 8 orders remain strong as fleets continue to replace older equipment,” says Steve Gilligan, general marketing manager for Kenworth Truck Co. “While we don't typically offer forecasts on the market, we do believe that the truckload carrier segment will remain strong.”
Demand has remained so strong that Freightliner LLC is adding a third shift and 593 new full-time jobs at the company's Cleveland, NC, manufacturing plant. “The North American heavy-duty truck market continues its vigorous recovery and we have a positive outlook for further improvement,” says Rainer Schmueckle, Freightliner's president and CEO. “We are experiencing strong demand across our Class 8 product line and especially in the over-the-road segment.”
Daniel Ustian, Navistar International's chairman, president and CEO, says the upsurge in new truck orders should continue through the balance of this year. “Recovery in the heavy truck sector is spread across our whole customer base. Indications are that current demand levels for heavy trucks will continue,” he says. “While some of the orders that have pushed the market in recent months are for delivery beyond our current fiscal year, the recent increase in industry production is a positive sign that customers are taking deliveries now to replace vehicles and are looking to expand their fleets.”
Kevin Flaherty, Mack's senior vp-sales, notes that fleet orders are neither slowing down nor speeding up right now. However, recent quote activity and customer sentiment suggest another uptick in fleet orders once summer is over. “Fleets are buying vehicles both to add to capacity and replace older equipment,” he says. “We also emphasize that we are seeing no signs of a pre-buy on the part of fleet customers.”
“Customers are still looking to buy large numbers of trucks,” says Scott Kress, senior vp-sales & marketing for Volvo Trucks North America. “[But] truck demand has shifted from ASAP orders from customers who want their trucks as quickly as possible to…customers [who] are starting the order process for their 2005 trucks — especially publicly-held fleets with established capital expense budgets.”
While Volvo has seen orders slow down in mid-July, that is relative because overall demand remains high by historic measures. “Volvo expects orders to pick up strongly again later in the third quarter, continuing at a high level through the end of the year and well into 2005,” Kress says.
Kress also notes demand has been consistent from both TL and LTL fleets, with growing order and price-quote activity from regional and small fleets. Demand has been mainly for replacement equipment, although some are starting to add capacity. “Owner-operators are also beginning to enter the market,” he notes.
Peterbilt's Ewald adds that many fleets delayed buying equipment when the new low-emission engines came out in 2002, so now that the economy is good they are replacing their older trucks. “We estimate there are more than 1-million trucks out there in the three to seven year age category and fleets are now looking to replace them.”
Although the high cost of diesel has not been a deterrent to Class 8 purchases, it has changed how fleets are spec'ing their equipment. “Fleets remain very interested in managing fuel economy,” says Kenworth's Gilligan. “They're spec'ing engines with less than 500 horsepower now, yet they want the flexibility to turn up the horsepower later.”