MD production projections take a tumble

Though industry experts say medium-duty truck demand continues to slowly grow, that segment of the truck market remains constrained by continued weakness in the housing and construction sector

Though industry experts say medium-duty truck demand continues to slowly grow, that segment of the truck market remains constrained by continued weakness in the housing and construction sector. Consequently, projections for medium-duty production are being reduced by some analysts for the coming year.

ACT Research Co. (ACT), for one, is cutting its medium-duty production forecast by roughly 10% for 2011. Though the firm said full-year production of medium-duty (Class 5-7) vehicles will be up 12% in 2010 compared to 2009 and accelerate to 18% year-over-year growth next year, the poor showing for medium-duty sales in 2009 makes the numbers look rosier than they really are.

“In aggregate, the medium-duty sector has had four months of improving fundamentals,” said Steve Tam, ACT’s vp -commercial vehicle sector. “With the housing recovery expected to be very protracted, the [medium-duty] segment will be slow to reach pre-recession levels.”

“The Class 4-7 market is really struggling to gain any momentum; it’s been stuck in neutral for a year and a half,” noted Jonathan Starks, director of transportation analysis for FTR Associates, at the firm’s recent 2010 Transportation Conference held in Indianapolis.

“Class 4-5 production in particular has been very weak,” he added, and is expected to comprise only just 4.4% to 6.3% of all medium-duty production by quarter through the end of 2011, according to FTR’s analysis.

After Class 4-7 production plunged to 94,000 units in 2009 from 143,000 units in 2008, FTR only expects medium-duty build rates to hit 104,000 units this year and 168,000 units in 2011 – still well short of the 196,000 medium-duty units built in 2007.

“In a nutshell, medium-duty trucks support a business,” said Starks; but right now, there’s little to no business growth occurring that would trigger more demand for medium-duty units, he stressed.

With the construction market contracting by 24% in 2009 and business investment levels falling 34% last year, it will take until 2012 before medium-duty production volumes even begin to approach the 241,000-unit peak set in 2006, Starks added.

TAGS: News
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish