Truck orders bottoming out

Preliminary data indicates Class 8 truck total net orders for all major North American OEMs dropped to 6,221 units in January this year, according to research firm FTR Associates . That marks the lowest level reached since July of 2002

Preliminary data indicates Class 8 truck total net orders for all major North American OEMs dropped to 6,221 units in January this year, according to research firm FTR Associates . That marks the lowest level reached since July of 2002.

January’s order activity – which includes the U.S., Canada, Mexico and Exports – is down 46.4% from December and 20.1% lower than the same month in 2009.

Yet this falloff in net orders isn’t unexpected, Eric Starks, FTR president, told FleetOwner, and orders should remain down for the next three months or so.

“The really big question mark is what happens from the second quarter onward,” he said. “We’re starting to see freight turn around a little, but there’s still a mixture of concern both around the technology and price tag of 2010-emission compliant equipment. So many fleets may take a ‘wait and see approach’ to let others buy and operate new trucks to see if there are any issues.”

The cost of 2010 emission control technology is also a huge issue, according to Kenny Vieth, partner and senior analyst with ACT Research Company. “For example, by the time you add in the $9,600 extra per truck for SCR [selective catalytic reduction] technology that Volvo is charging along with the FET [federal excise tax] and sales taxes, you’re looking at a $12,000 increase for a new 2010-compliant [Class 8] truck,” he explained. “That’s not going to make people rush out and buy a new truck.”

FTR’s Starks noted another twist to the new truck sales picture: potential gains in fuel economy with new 2010 technology, especially SCR, balanced against unexpected maintenance costs for the new emission control systems.

“It comes down to the numbers, and truck buyers are pretty savvy about numbers these days,” he said. “Let’s say you get that 5% gain in fuel economy from SCR – that could save you a lot of money and make for a compelling ROI [return on investment] scenario for a 2010-compliant truck, despite the higher cost. But if there are unexpected breakdowns due to that technology, that makes the ROI less certain. Fleets are still worried about hidden costs to the new 2010 emission control systems.”

As a result, FTR projects truck sales will remain soft in the first half of 2010, with some demand slowly returning late in the year. “Our overall annual forecast for Class 8 production this year remains relatively flat from 2009, with significant improvement expected in 2011,” Starks noted.

That’s in line with OEM predictions. Global truck maker Paccar, for one, believes U.S. and Canadian Class 8 retail sales in 2010 should range between 110,000-140,000 units, up slightly from 108,000 in 2009, but still far short of the 153,000 Class 8 units sold in 2008.

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