Class 8 U.S. retail truck sales in May topped out at 25,149, a 20% jump over the 20,953 units sold in May 2005, according to www.WardsAuto.com
That brings the first five months of 2006 tally to 114,969, an 18% rise over the 97,302 units sold during same period last year.
According to Kurt Burmeister, gm of North American field operation for ArvinMeritor, the supplier is expecting 2006 to be a record build year for OEMs, with record retail sales tracking forecasts. For ArvinMeritor’s fiscal year ending Oct. 31, the supplier conservatively expects a total North American Class 8 production of 327,000.
“Order slots are filling up fast and are virtually filled,” Burmeister told FleetOwner. “If [carriers are] looking for a couple trucks with the ’06 engine they have a chance to find it at the dealer lots. If they go into the OEM board it would be difficult. For between 10- to 50-truck runs they’ll be pushed out beyond January at this point.
“You’re also locked into what’s in the truck,” Burmeiseter continued. “If it’s in the order board [OEMs are] doing all they can to meet their schedules so they try to limit the variations in that build process. That makes last-minute changes or [spec variations] difficult—it raises a lot of supply issues if [carriers] do it.”
Despite a very bullish year for Class 8 truck OEMs and their suppliers, the industry is waiting for the other shoe to drop. In 2007 sales are expected to drop sharply in response to the higher sticker prices that will accompany the ’07 models as the trucks will be equipped with new emissions reduction technologies. These technologies are required to meet a tighter Environmental Protection Agency (EPA) emissions standard for commercial trucks that goes into effect Jan. 1, 2007.
The trucking industry is also concerned that ’07 models will be more expensive to operate due to lower fuel economy and more maintenance. The good news is that investment banking firm Bear Stearns said today that a national long-haul truckload carrier testing Freightliner trucks with ’07 Detroit Diesel engines reported no loss in fuel economy. However, that carrier expects its delivery of new trucks will be down as much as 67% in 2007, Bear Stearns said.
ArvinMeritor’s Burmeister expects fiscal year 2007 North American truck production will be 170,000 units— a 48% decline from its conservative FY 2006 forecast.
Last week, Kenny Vieth, partner of A.C.T. Research Co., LLC, said during a Bear Stearns conference that North American Class 8 truck production in 2006 is expected to range from 355,000 to 365,000 units, but drop roughly 40% to 207,000 units in 2007.
Noting still-tighter EPA emission standards to be mandated on model year 2010 commercial trucks, the industry expects truck sales will build back up to record levels in 2009 before falling yet again in 2010. This is what Vieth calls the “yo-yo” effect EPA emissions mandate has on commercial truck sales.
Burmeister concurs with this projection. “We do see that cycle repeating itself. Sales in ‘08 will be stronger than ‘07, and ‘09 will look like [the record levels in] ‘06.“We try to maintain capacity for a volume level that we can live with in the soft markets and strong markets and look for outside help [to meet the record demands of] today,” Burmeister continued. “We’ll scale back on suppliers when we get to that 170,000 level [in 2007]. The cycle is being dictated by EPA requirements. It’ll be a three-year cycle before we get big again.”