OEMs continue to believe demand for Class 8 trucks will remain high for the balance of 2004 and into 2005, though orders should begin to slow next year.
“Orders are strong [and] the good news is our plants are managing very well to keep reasonable delivery times,” John Fay, director of marketing for International Truck & Engine Corp.’s heavy vehicle division, told Fleet Owner.
“The result is the order board is solid and does not have dealers or customers entering orders to hold slots. In fact, our in Chatham, Ontario, is ramping up to produce 110 trucks per day and the workers there are doing a great job of responding to the workload by continuing to produce quality trucks.”
Fay said overall Class 8 orders for the entire industry settled at 26,675 in June off the very high levels of over 30,000 per month earlier this year, according to International’s data. “Those 26,675 orders for June are still considered very good,” he added.
Alexander Cutler, Eaton’s chairman & CEO, noted that his company’s data revealed that heavy-duty truck production in the NAFTA nations [Mexico, Canada, and the United States] was up 41% in the second quarter this year compared to 2003, with medium-duty production up 15%. By contrast, European truck production was up only 9%.
“Second quarter production of NAFTA heavy-duty trucks totaled 63,000 units, about 17% more than in the first quarter of 2004,” said Cutler. “Monthly orders for new heavy-duty trucks during the second quarter have averaged 33,000 units. As a result, we are now estimating that the NAFTA heavy-duty market in 2004 is likely to total at least 255,000 units.”
“Everyone is in the market [to buy trucks] and they are both adding and replacing units,” added International’s Fay. “Demand will continue to be strong [in 2004] but we will see a more moderate order rate in 2005.”
OEMs Reporting Strong 2Q Earnings
Volvo Group and Paccar recently released their second-quarter earnings reports. Both companies are posting rising profits over the fourth quarter with Paccar netting $236.5 million, a 29.8% increase over the previous quarter. Volvo AB’s truck segment earned before interest payments and taxes 2,287 million SEK, a 55% jump over the previous quarter.
Tom Plimpton, Paccar president, stated, “During the first six months of 2004, industry retail sales of Class 8 trucks in North America totaled over 110,000 units, 40% higher than a year ago. An 8% increase in industry freight tonnage, improved carrier profitability, low interest rates and equipment replacement cycles are driving industry sales.”
Leif Johansson, AB Volvo CEO, states, “We reiterate our previous forecasts for the heavy truck market in North America; the current forecast reflect an increase of about 30% to between 230,000 and 240,000 trucks in 2004.”
For Volvo Group, North American truck deliveries accelerated in the second quarter to 12,173 units— a 24.6% increase over the previous quarter. Of the deliveries, 5,950 were Mack Trucks and 6,161 were Volvo Trucks. Mack Truck deliveries jumped 22.4% over the previous quarter and Volvo Trucks increased 26.9%.