Class 8 retail truck sales in February reached 20,399 units—a brisk 19% jump compared to February 2005, according to www.WardsAuto.com. The high numbers presents further evidence that the business environment for the trucking industry is strong enough to support heavy capital spending.
On a seasonally adjusted annualized rate, February sales would mean about 280,000 units will be sold in all of 2006, according to Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC). That would top the 252,792 units actually sold in 2005.
On a month-to-month basis, that number is a 6% increase over the 19,229 units sold in January 2006. Although January was a weaker month in absolute terms, on a seasonally adjusted annualized basis it represented 282,500 units for all of 2006.
“Basically we’re seeing the first two months of the year posting very strong truck sales,” Brady told FleetOwner. “We’re not seeing right now the real push [fleets pre-buying ’06 model trucks to avoid the more expensive ‘07s]. Some of it is pre-buy but that will be a greater factor in the second half of ’06.”
Interestingly, February inventories of Class 8 trucks compared to the same month last year skyrocketed over sales growth. Dealers had 49,413 units of inventory compared to 37,277 in February 2005—a 33% jump.
This is an indication that dealers are stocking up in anticipation of very strong 2006 sales as fleets expand capacity to meet growing shipper demands and gear up to pre-buy.
“[The dealers] anticipated sales to increase thanks to the pre-buy so they have a lot of trucks on their lots to meet that demand,” Brady said. “On the OE side, the manufacturers want those inventories to be lean. For [OEs], the worst case scenario is by the end of ‘06, there will be still 49,000 trucks on dealer lots.”
However, so far this year there is evidence that freight volume growth has actually accelerated compared to the second half of 2005, Brady said. And with pre-buying anticipated to increase toward the second half, for now it appears dealer decisions to bulk up are justified.