Betting on cabovers

Last month I talked with Ted Fick, senior vp at Hino Diesel Trucks (USA). One reason for our chat was Hino's remarkable 27% sales growth last year — in the midst of one of the worst downturns in truck sales in over a decade.

Although Hino is still a very small player in the medium-duty truck market — about ½% total market share and 7% of the medium-duty cabover business — it's starting to see more fleet interest in cabovers. This is a very big deal.

“In the world market, the cabover is it,” says Fick. “North America is the only market where the conventional is king.” Fick adds that 92% of all medium-duty truck sales in North America are conventionals. That's a pretty daunting number if you only sell cabovers.

But Fick and the other cabover OEMs, including American Isuzu Motors, UD Trucks and Mitsubishi Fuso, don't see it that way. For years, they took market share away from each other; now they're taking it away from the conventionals. It seems that medium-duty fleets are taking a second look at which truck design best fits their operations.

“I think the cabover market will grow in the future,” says Dan Cutler, director of low-cab-forward product development at American Isuzu. “With the economy the way it is, customers need to reduce their operating costs by being more efficient…they need to deliver more goods with fewer round trips.” According to Cutler, larger bodies can be mounted on cabovers than can be mounted on conventionals with the same wheelbase — without compromising their ability to turn on narrow streets and alleys. “The cabover can also offer better visibility, leading to safer operation and less vehicle damage,” he adds.

At the same time, the price differential between cabovers and conventionals is disappearing. A couple of months ago, I wrote that the average cabover comes with a $3,000 premium over the conventional model. Todd Bloom, vp-marketing, American Isuzu, says that really isn't the case anymore for cabovers equipped with gasoline engines. And even for those with diesel engines, the difference in price is decreasing. With price paying a smaller role, fleets can look primarily at operational issues when choosing between cabovers and conventionals.

And as Fick points out, those operational issues can be pretty substantial. For starters, the U.S. is rapidly becoming a very urbanized nation. That means more areas with narrow streets to navigate. “Urban density continues to grow,” says Fick. “Fleets are going to need a vehicle to fit those urban applications where a high payload and a tight turning radius are necessities.”

Lots of the big players in the U.S. truck market know that and have reacted accordingly. PACCAR has brought in cabovers from its European-based DAF subsidiary for its Kenworth and Peterbilt lines. Freightliner has developed cabovers in a number of applications, and mergers/partnerships between Volvo/Mack and GM/Isuzu have widened the range of cabover truck offerings. The cabover is no longer an afterthought in the North American market; it's getting serious attention from manufacturers.

Hino also wants to bring its global muscle to bear in the U.S. Parent company Hino Motors is one of Asia's largest truck makers. It's the number-one seller in Japan and has 40% market share in Australia. By 2011, Hino wants to be selling 30,000 Class 3 to 7 trucks in the U.S. annually, an ambitious tenfold increase in sales.

All this activity on the part of manufacturers is a reflection of the fact that U.S. fleets are showing more interest in cabover trucks. Remember that old business axiom, “Go where the money is”? It looks like cabovers may be where the money is in the near future.