Class 8 trucks enjoy warm spring

Class 8 trucks enjoy warm spring

Heavy-duty Class 8 retail sales in April amounted to 24,297 units, according to a preliminary report released by WardsAuto.com. This marked a 6% dip compared with the revised 25,895 units sold in March

Heavy-duty Class 8 retail sales in April amounted to 24,297 units, according to a preliminary report released by WardsAuto.com. This marked a 6% dip compared with the revised 25,895 units sold in March.

According to Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), the April figure represents a seasonally adjusted annual rate of 271,000. This is significantly less than March’s annual rate of 299,000.

Although April was a softer month, when compared with actual full-year 2005 sales of 252,792, which was considered to be a very strong year, market analysts are hardly deterred from their original projections that 2006 will be an even better year for Class 8 truck sales. In fact, sales jumped 19% in April 2006 compared with April 2005, which saw 20,390 units sold.

For the first four months of 2006, a total of 89,820 units were sold— almost 18% above the same period last year.

At a recent Bear Stearns transportation briefing held in New York City, Ken Vieth, co-principal of ACT Publications and principal of A.C.T. Research Co., weighed in with very bullish projections.

North American Class 8 truck production for the full year 2006 is headed for 358,000 units, Vieth said. Order intakes fell in April because there were no slots left to sell. March set a retail sales record. Backlogs and build rates are at a near-seven-year high.

Mike Pennington, senior director of global communications for ArvinMeritor told FleetOwner that the company believes North American Class 8 production will total 340,000 for the fiscal year ending Sept. 30. Despite the March to April drop in sales, “we’re still confident and quite delighted with the strong market,” Pennington said.

“The thaw on the annual rate from March to April is nothing of concern,” CMVC’s Brady told FleetOwner.

Brady pointed out that first quarter earnings across the trucking industry were generally positive, meaning that balance sheets are healthy enough to support the capital investments needed to grow capacity. And on top of that carriers are expected to pre-buy trucks to avoid purchasing 2007 and later models, which will be more expensive to buy than current models.

Inventories bulked up 19% in April compared with April 2005. This is because dealers are stocking up in anticipation of commercial diesel trucks selling like hotcakes before the ’06 models are replaced by ‘07s, Brady added.

“Inventory levels are pretty high,” Brady said. “By the second half [of 2006] you’ll see retail sales stronger than production, and a decrease in inventories. At the current sales level, it’s not a concern. But after the pre-buy if it’s at that level for the truck makers it would exacerbate the [sales downturn that’s expected in 2007].”

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