Class 3-5: Midrange Heating Up

Feb. 1, 1999
Sizzling sales move midrange to front burnerFueled by the nation's high-fired economy, vehicle sales - and model offerings - in the midrange Class 3-5 market are at a rolling boil. The population of midrange trucks in service now totals 1.2 million. The latest sales figures are also impressive.According to full-year retail data (see chart, p. 43) released by the American Automobile Manufacturers Assn.

Sizzling sales move midrange to front burner

Fueled by the nation's high-fired economy, vehicle sales - and model offerings - in the midrange Class 3-5 market are at a rolling boil. The population of midrange trucks in service now totals 1.2 million. The latest sales figures are also impressive.

According to full-year retail data (see chart, p. 43) released by the American Automobile Manufacturers Assn. (AAMA), the midrange segment realized a 44% gain in ' 98 over '97.

Reviewing sales figures for the last five years shows that Class 3 gained steadily year by year until 1998. That's when Class 3 sales shot up 94% over the year before.

Class 5 showed solid gains over the same period. Then in '98, sales shot through the roof - posting a whopping 172% increase over '97.

Meanwhile, Class 4 grew at a respectable rate through '97, but recorded a 30% drop in '98. The much wider range of Class 3 and 5 models available - not to mention more options like automatic transmissions - may explain the Class 4 dip.

Chris Brady, vp and chief economist of research firm Martin Labbe Assoc. (MLA), cautions that midrange sales figures should be taken with a few grains of salt.

"The truck sales figures reported by AAMA are somewhat misleading," he advises. "Because OEMs often used Class 2 and Class 6 platforms to supply trucks into the midrange, they were often reporting midrange sales as either Class 2 or 6 sales to AAMA."

However, recent behavior by OEMs lends credence to the optimistic sales picture. "As truck sales into the midrange expanded," Brady points out, "OEMs began to design models specifically for Class 3-5 applications. These were reported accurately as midrange sales.

"All in all," he adds, "the midrange truck market is continuing to expand. And the OEMs are continuing to develop new models for this segment."

Who's buying all these trucks? It's the old story of the butcher and the baker, if not the candlestick maker. According to Brady, companies engaged in wholesale and retail trades are the biggest users of midrange equipment, primarily to conduct local delivery service.

"Sales to wholesalers and retailers will probably continue to increase at a faster rate than overall midrange sales over the next few years," Brady points out.

He says these users are adding new services to differentiate themselves. "For example, Office Depot now delivers supplies directly to offices. And at Home Depot, customers can rent a truck to haul product home from the store."

The next biggest users are vocational fleets, chiefly those engaged in agriculture, construction/contracting, and all sorts of service industries.

Brady says agricultural sales will grow at a lower rate than the overall market, due to farm income being dampened by weak prices and by the trend toward business consolidation.

He expects the construction/contractor segment to expand at roughly the rate of overall construction spending.

Service industries are another hot ticket. Brady says sales there will expand at a higher rate than the total midrange market simply because the service sector is growing at a faster clip than the overall economy.

"Business firms will continue to outsource certain functions, such as uniform laundering, and householders are purchasing services, like lawn care, once performed by themselves," he notes.

Sales to for-hire fleets will also grow faster over the next few years than the overall midrange segment. Brady contends the Internet will play a role here.

"As more persons purchase goods through online shopping," he says, "parcel delivery demand will be stimulated." He notes that the familiar brown UPS "package car" is a Class 5 vehicle.

Truck OEMs are enthusiastically responding to growing midrange demand. Now, buyers can select from the widest array of midrange trucks ever available.

For example, Ford's SuperDuty - whose introduction a few years back is often credited with reinvigorating Class 4 - is now being offered in a range of models spanning Class 3-5.

The newest midrange player is Bering Truck Corp., which only began selling trucks here last year. This summer, the OEM will formally introduce its first Class 3 and 4 models.

The Class 3 LD12 (12,000 lb. GVW) and the Class 4 LD15 (15,000 lb. GVW) will be powered by 160-hp. Detroit Diesel D638 engines. They will be initially available with Allison 542AT automatic transmissions only, but 5-speed manuals will follow.

According to Jay Sandler, Bering vp-sales and marketing, most Class 3 and 4 buyers prefer automatics. "For our part, we're putting in a true automatic transmission rated for 22,000-lb. vehicle weights. We feel the Allison gives us a bulletproof midrange spec."

Sandler says every truck Bering makes will come standard this year with an antilock braking system. The LD models will feature Bosch ABS.

Isuzu has reacted to growth at the high end of the midrange by adding the Class 5 NQR to its '99 lineup. The new model carries a 16,500-lb.-GVW rating and has a body/payload capability of up to 10,592 lb.

The NQR can be fitted with bodies ranging from 12- to 20-ft. long for use in such applications as parcel delivery, reefer freight, refuse collection, and construction.

Powered by a new 175-hp. Isuzu 4.8-liter, 4-cyl. turbodiesel, the NQR can be spec'd with an Aisin 4-speed overdrive automatic or an Isuzu 6-speed synchro overdrive manual. Both units offer PTO capability.

For '99, Hino Diesel Trucks (U.S.A) is bringing more horsepower into the midrange. Both its Class 4 FA1517 and Class 5 FB1817 have been boosted from 165 to 168 hp. at 2,500 rpm.

The Hinos are offered with a standard 5-speed synchro transmission, featuring PTO capability, and the 4-speed Allison AT452 automatic is optionally available.

Mitsubishi Fuso continues to offer Class 3-5 trucks. Its Class 5 FH has been upgraded for '99 with a high-grade interior and a new 191.7-in. wheelbase that can support a 22-ft. body.

Both Mitsubishi's Class 3 FE and FE HD models can be ordered with any of three wheelbases - 108.3, 131.0, and 148 in. - selected to accommodate bodies from 10- to 16-ft. long.

According to Dick Pennell, commercial brand manager for GM Medium-Duty Trucks, GMC and Chevrolet W-Series low-cab-forwards will take on all comers.

The W-Series features two new Class 4 ratings (14,050 and 14,500 lb. GVW) as well as a new Class 5 model (16,500 lb. GVW). The trucks will be powered by a new 4.75-liter turbodiesel.

W3500 (Class 3) and W4500 (Class 4) models will be offered with a 142-hp. rating and 5-speed manual or a 175-hp. rating and Aisin 4-speed automatic. As for the new W5500 (Class 5), a 175-hp. rating will be standard and customers will get to choose a 6-speed manual or the Aisin automatic.

And for '99, Nissan Diesel America has added two midrange models to its UD Trucks line. Dayle Wetherall, senior vp and general manager, says the UD1200 brings Nissan Diesel into the Class 3 market. Powered by a 145-hp. turbodiesel, the 1200 can be ordered with an overdrive manual or an automatic transmission.

A hybrid between the existing Class 4 UD1400 and Class 5 UD1800HD, according to Wetherall, the new 1800CS ("city spec") is aimed at buyers seeking Class 5 performance with the economy expected of Class 4. The 1800CS boasts a 175-hp. turbodiesel and can be spec'd with a Nissan Diesel manual or an Aisin 4-speed automatic transmission.

As the midrange ranks grow, certain spec'ing trends continue to solidify. It's obvious to anyone who's been on a city street that the cabover design overwhelmingly dominates Class 3-5.

MLA's Brady estimates that roughly 40% of the midrange population is diesel-powered. "Diesel's share increases as GVW increases," he notes. "This implies Class 5 has a higher dieselization rate than Class 3."

Looking ahead, alternative fuels should also find the midrange a hospitable environment. "Alternative fuels will probably gain greater acceptance in the midrange before they do in the medium- and heavy-duty segments," Brady observes.

"Midrange trucks largely operate locally - within a 50-mile range - and are domiciled at the same location nightly," he continues "That means large midrange fleets could justify investing in on-site storage facilities for alternative fuels."

Class 3-5 trucks literally can't avoid being designed for driver comfort and convenience. Non-professional drivers who must contend with busy local traffic patterns and congested work areas largely operate them.

It's little wonder, then, that midrange suppliers often promote their vehicles as being "car-like" for drivers- but "truck-tough" for their owners.

That pitch addresses the twin concerns of many buyers: getting a truck that gets a task done as easily as possible at the lowest possible cost.

Transmission choice clearly reflects this marketing dynamic. One OEM reports demand for manual transmissions is down to about 15%. He contends that most of those still buying sticks for Class 3-5 trucks are "diehards" who wouldn't buy a car with an automatic transmission, either.

Everyone else - the vast majority - seems sold on how automatics can simplify life for drivers and reduce or eliminate costs of fixing transmissions and clutches that are unwittingly abused by novice truck drivers.

A spec buyers won't have anything to say about is antilock braking. Starting next month, ABS will be mandatory on new hydraulically braked commercial vehicles.

As with automatics, prior experience with ABS on cars and light trucks should make its arrival in the midrange essentially a non-issue for most fleet owners.

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