TAMPA, FL. Paul Vikner, president & CEO of Mack Trucks, believes truck sales in 2006 will be as strong – if not stronger – than they were in 2005. He bases that view on positive economic fundamentals as well as fleets pre-buying new trucks early in their cycle to avoid the more expensive 2007 models.
“We took in a record number of orders in January and, as of right now, our February order totals are running double those of January,” Vikner said here during a presentation at the 50th annual Technology & Maintenance Council meeting. “Housing starts, consumer spending, infrastructure investment – all of the economic fundamentals are there. And I think there is no debate that a serious pre-buy ahead of 2007 is already well underway. All of that is pointing to continued strong sales in 2006 for our industry.”
He noted that truck sales and build rates set records in 2005, while truck orders posted their fourth-best showing ever. He expects more of the same in 2006.
Total Class 8 retail truck sales topped 329,000 units in 2005, Vikner said, with the build rate reaching 341,000 units. New truck orders totaled 335,000 in 2005, with 2004 posting the largest number of orders ever at 385,000 units, he said.
“We believe, based on the trends we’re seeing right now, that in all likelihood 2006 sales are going to match the 2005 level – even exceed them,” Vikner said.
“Now, though overall economic conditions appear strong for the rest of 2006, the one wild card is oil prices,” he cautioned. “They were up significantly in at the end of 2005 and reached higher levels earlier this year – driven in part by Iranian economic responses to their nuclear program in terms of possible U.N. sanctions against Iran.”
The issue facing truck buyers now, said Vikner, is whether enough order slots will be left in 2006 for them to pre-buy all the trucks they’d like.
“It’s unlikely that we, the OEMs, are going to add plant capacity and it’s even unlikelier that our suppliers will,” he noted. “That means customers are going to face a tough call soon as we expect by May that order slots are going to be filled up for the year. The decision they face is to either buy ’07 trucks or risk not having enough rolling stock to meet freight demand – and ’07 model pricing is going to play a large role in that decision-making process.”