OEMs project modest improvement in truck sales

March 26, 2010
LOUISVILLE, KY. Truck makers gathered here at the Mid America Trucking Show all believe the worst of the U.S. and global economic recession is over, with freight levels and truck sales now poised for a moderate recovery this year

LOUISVILLE, KY. Truck makers gathered here at the Mid America Trucking Show all believe the worst of the U.S. and global economic recession is over, with freight levels and truck sales now poised for a moderate recovery this year. However, the OEMs differed on how large such a truck sales increase will be, with many also believing the most profitable pastures for their wares in the days ahead may lie outside the traditional core markets of North America, Europe, and Japan.

“We’re really glad 2009 is over. It was a really difficult year,” said Kevin Flaherty, sr. vp-U.S. and Canada, for Mack Trucks Inc. “We didn’t break selling 95,000 Class 8 units in the U.S. last year and only sold 11,000 to 12,000 units in Canada. It’s difficult for the [truck manufacturing] industry to sustain itself at those levels.”

Yet Mack thinks there’s the possibility that 2010 sales could jump 20% to 30% over last year’s dismal numbers, as orders for new trucks increased over the last four to six weeks. “We’re starting to feel a bubbling of activity out there, but we’d really need a lot more positive economic indicators for the back half of 2010 to really see a 20% increase in truck sales,” Flaherty said.

“We’re definitely seeing some improvement in the market now,” noted Bill Jackson, gm for Peterbilt Motors Co., predicting Class 8 sales volumes of 120,000 to 140,000 units this year, with slightly higher sales for the medium-duty segment.

“The feeling is better among our customer base so far this year, with all key indicators saying 2010 is going to be a better year,” added Bill Kozek, gm for Kenworth Truck Co. which, like Peterbilt, is a division of Paccar.

Yet the key to any truck sales recovery, he stressed, is for truckers to get better rates to help offset the cost of new mandated emissions control technology, which has significantly increased sticker prices. “If they get better [freight] rates, then 2010 will be a good year, with 2011 even better,” Kozek noted.

Jim Hebe, sr. vp of North American sales operations for Navistar, is more conservative in his Class 8 outlook for 2010, predicting only a 5% plus or minus swing in truck sales from 2009 – equating to between 90,000 and 110,000 Class 8 units sold this year.

By contrast, though, he believes Class 6 and 7 sales are going to really jump, climbing to 60,000 units this year over 47,000 units in 2009 – with those numbers excluding school buses, stripped-down chassis, and severe service model sales.

“We’ll see a medium-duty uptick in 2010 thanks largely to leasing companies that are coming back into the market after holding off buying new units for two years,” Hebe said.

Andreas Renschler, head of global truck and bus operations for Germany’s Daimler AG, added that economic indicators to date signal that positive trends are strengthening for commercial truck market in the U.S.

He noted that its Daimler Trucks North America (DTNA) subsidiary reported a 58% increase in new truck sales this past January compared to the same month in 2009, with that order volume holding steady into February. Consequently, Renschler is confident that the U.S. commercial truck market should experience a modest recovery this year, with sales growing 10% to 15%.

Martin Daum, DTNA’s president and CEO, echoed that confidence, noting that U.S. gross domestic product (GDP) should increase 3% to 4% through 2011. “We’re seeing signs of a more robust housing market, which is always a leading freight indicator – and freight is everything that matters to this industry,” he said.

Daum predicted that U.S. trucks sales should grow 13% this year over 2009, with year-over-year volumes growing 33% from 2010 to 2011. “The average age of the [U.S.] fleet is 6.5 years – the highest it’s been since 1986,” he stressed. “So we plan to be ready to ride the wave of recovery when it comes.”

He also noted that DTNA has received 7,000 orders so far this year from 700 customers for its 2010-compliant trucks equipped with selective catalytic reduction (SCR) technology.

Renschler added, however, that the strongest growth for truck sales in the years ahead won’t come from the traditional core markets for OEMs – North America, Europe, and Japan, which he calls “The Triad” – but rather from the “BRIC” nations of Brazil, Russia, India, and China.

“These are the growth markets and are increasingly acting as a ‘counterweight’ to declines in demand from the ‘Triad’ countries,” he said.

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