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HDAD Photo: Kevin Jones
Ken Davis (left), Roger Nielsen, and Dean Engelage, and Chris Patterson at Heavy Duty Aftermarket Dialogue.

2019 off to strong start, but OEMs, aftermarket wary of a slowdown

LAS VEGAS. From new truck and trailer orders to aftermarket sales, 2019 is off to a strong start, picking up where last year left off. 

However, for trucking industry executives attending the Heavy Duty Aftermarket Dialogue event earlier this week, there remains some trepidation, wondering when a slowdown will occur.

Ken Davis, founder of Greentree Advisors LLC, said original equipment manufacturers’ order boards and backlogs are currently so jam packed, they could conceivably produce even more units than they did during 2018.

However, Davis, previously president of Eaton Corp.’s vehicle group, said it is unlikely that could become a reality due to capacity issues. And while encouraging the industry to enjoy these “really robust times,” Davis hinted a pullback in the second half of 2019 is possible.

That sentiment was echoed by Roger Nielsen, president and CEO of Daimler Trucks North America (DTNA). Nielsen projected U.S. Classes 6-8 sales for the year will likely top 450,000 units, nearly the same as 2018.

Photo: Kevin Jones

William Strauss of the Chicago Fed called economic growth from the tax cut law a sugar high.

He noted there was panic ordering during last summer’s crunch, including fleets placing similar orders with multiple dealers in an attempt make sure they were able to take delivery.

As a result, DTNA instituted additional steps to better vet these orders when initially placed as a way to avoid cancellations by fleets later on. As a result, about 58,000 were pre-emptively cancelled by DTNA because they were deemed “not credible.”

Looking ahead further into 2019, he projected “some moderation” at the end of the second quarter, followed by “a little bit of normalization in the second of the year.” But there is no sense there will be a significant pullback by fleets.

Dean Engelage, president of Great Dane Trailers, offered a similar assessment for 2019, following a record year of about 325,000 units produced industrywide in 2018.

While there are expectations of some softening in the coming quarters, certain trailer categories have “come on strong, if not stronger” than 2018, he said. Still, Engelage noted he too is eyeing any movement on order cancellations.

Meanwhile, sales of the aftermarket sector in the United States totaled an estimated $30.8 billion last year, up from $30.4 billion in 2017, according to data from MacKay & Co.

Growth is projected to continue the coming years, reaching $34.9 billion in 2022 as the total number of trucks in operation continues to climb. MacKay & Co. also projected aftermarket parts pricing to continue gaining about 1% per year.

These gains come as the United States remains on track to break the record for longest continuous economic expansion later this year, said William Strauss, senior economist and economic advisor for the Federal Reserve Bank of Chicago.

He classified the strong growth during the past year a “sugar high” from the tax cut law and projected gross domestic product to be more in the range of 1.8% to 2% in the coming quarters.

Strauss downplayed the long-term effects from potential tariff disputes, noting they have been low for many years, and moving “more in line with other countries.”

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