Talks given by the chief executives of two major truck manufacturers during the Great American Trucking Show highlight continued confidence in both the U.S. economy and Class 8 trucks sales for the rest of 2006 and into 2007.
“Despite high fuel prices, jitters about emission control technology required for trucks in 2007 and global instability – especially in the Middle East – we believe 2006 is going to remain a good year economically, with trucking staying strong,” said Chris Patterson, president and CEO of Portland, OR-based Freightliner LLC.
“That being said, we must remember that this impending downward swing in the business cycle [for Class 8 truck sales] is very different,” he continued. “We’ve known for a long time it was coming and so we’ve able to prepare for it to an extent. It’s the depth that truck sales in ’07 may fall to that remains the big unknown.”
Patterson pointed out that Freightliner is basing its future business plans on slower economic growth in the U.S., as well as the expected near-term downturn in truck sales related to ’07 issues.
Dan Sobic, general manager for Denton, TX-based Peterbilt Motors, said his company is forecasting a drop in Class 8 sales next year to between 200,000 and 250,000 units – a far cry from the 310,000 to 320,000 Class 8s the industry expects to sell this year. “That may seem low to the industry, but remember, we are coming off extraordinary sales numbers for the last few years,” he added. “Annual truck sales of 200,000 units are healthy by any standards.”
The real road bump for truck makers where ’07 is concerned revolves around the base sticker price increases necessary to account for the inclusion of pricey emission control systems, not the performance of the technology.
“We’re finding that customers are not concerned about ’07 technology itself – just the cost increases it brings to their trucks,” said Sobic.
However, he emphasized that price increases may not affect the fleets as much as they think because freight demand will remain high through next year. Coupled with continued tight capacity, rates should rise.
“Carriers are utilizing every available tractor they can to haul freight now,” Sobic said. “Though there will most likely be a slight slowdown in the economy, that won’t free up trucking capacity because the availability of drivers remains very limited. There’s no end in sight for the driver shortage and that’s going to constrain capacity for some time to come.”
Patterson noted that for Freightliner’s medium-duty trucks, an additional $4,500 to $6,000 is being added to the sticker price, with heavy-duty vehicles going up $7,000 to $12,500 to cover the cost of ’07 technology. “We’re finding that aside from price, customers are very confident in ’07 technology; that bodes well for the future,” he added.
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