Peterbilt Motors Co. is notably bullish on the economy and business opportunities in 2018, and on Thursday predicted that U.S. and Canadian retail sales of Class 8 trucks will be in the 235,000-265,000 range for the year.
Pointing to "one of the strongest economic outlooks in many years," Kyle Quinn, general manager of Peterbilt Motors Co. and senior vice president of Paccar, made that prediction. Growth in the U.S. gross domestic product (GDP) is expected to be above 2.5%, he noted, and business investment is increasing, rising more than 4% since 2016.
"The manufacturing sector is particularly strong; capital spending is currently growing at an annual rate of about 8%," Quinn said. Consumer confidence is also strong, he added, and motor vehicle sales in general have been good, driven by favorable economic conditions.
Quinn also pointed to recently passed tax reform helping set the stage for an excellent year for business. "The tax law changes for business will create new opportunities for our customers and for us as a business — all in all, a very healthy environment," he said.
That environment is also starting to show in the trucking industry, and Peterbilt expects solid opportunities this year in the commercial vehicle market. "Freight tonnage is at record levels, driven by many industries as well as the growth of e-commerce. Carrier rates are increasing, and orders and retail sales of Class 8 trucks are increasing," Quinn said.
The energy sector is picking up as well with crude oil now above $60 a barrel, and Peterbilt has begun to see some corresponding new orders in related trucking such as oil-hauling fleets. Home prices and new home starts also are rising, and the construction segment "remains strong," Quinn noted, and used truck pricing has stayed flat — all of which could mean favorable days ahead for new truck orders.
"We expect 2018 Class 8 retail sales will be in the range of 235,000-265,000 for the U.S. and Canada, likely to be the third-strongest market ever," he contended. "The medium-duty market is steady, and our forecast is 85,000 vehicles this year."
Robert Woodall, assistant general manager of sales and marketing at Peterbilt, said additional gains should start to show more in the second quarter. "Many of our customers are getting ready for growth," he said.
The biggest roadblock the trucking industry faces amid these positive factors, however, is the persistent driver shortage, which Peterbilt sees as "the major headwind keeping a lid on rapid fleet expansion." Unemployment has remained low, which is also making for tight labor markets.
The company also reported several milestones for 2017 and so far this year; notably on Jan. 9, Peterbilt built its 1 millionth truck at its Denton, TX plant, and that truck will be given away to Peterbilt's top "superfan" to be announced at the upcoming Mid-America Trucking Show in March.
Last year, Peterbilt produced more than 40,000 vehicles, with its Model 567 and 579 on-highway trucks accounting for 70% of that total. The company increased its market share of Class 8 retail sales to a record 15.3% in 2017, Quinn noted, and also saw a 20% share in the vocational market. Within the vocational segment, Peterbilt's share of refuse truck sales hit a record 30%.
Peterbilt sold 43% of its trucks last year with Paccar MX engines, and with the introduction last fall of Paccar's 12-speed automated transmission, the company expects to see increased uptake of fully-integrated Paccar powertrains.
Meanwhile, Peterbilt has just completed a major expansion and investment at its Denton plant, where it builds Class 8 trucks like the new Model 579 Ultraloft unveiled yesterday in Scottsdale, AZ. The expansion project included 17 new dock doors at the facility to improve material flow as well as a new automated storage-and-retrieval system for painted parts. The company added a 100,000 sq. ft. test facility at the back of the plant where new vehicles are prepped for delivery.
"Overall, this is a $100 million investment, and we've achieved the highest level of productivity and quality in the plant's history following its completion," said Quinn. He also noted that since the launch of Paccar's SmartLINQ remote diagnostics system, Peterbilt has now installed the system in more than 55,000 in heavy-duty vehicles. SmartLINQ supports MX and Cummins engines and has helped customers increase uptime, he said.
"We're rolling out our service management solution to speed service and simplify customer communications," Quinn told reporters. In addition, Paccar recently opened an innovation center in the heart of Silicon Valley, he added, and "the work done there will lead the charge on Peterbilt's road to advanced driver assistance systems."
At present, those include active emergency braking, active lane-keeping assist, adaptive/predictive cruise control and blind-spot monitoring, but Peterbilt has also been working on Level 4 autonomous truck operation. That's another area where the company expects to see growth and progress, Quinn pointed out, noting he expects "a dramatic opportunity to improve the lives and reduce the burden on drivers" with continued advancement of autonomous trucks and driver assistance systems.