Truck sales jump 33%

Truck sales jump 33%

May 2005 year-to-date Class 8 truck sales jumped over a third over the same period last year, to 97,302 units from 72,654, according to

May 2005 year-to-date Class 8 truck sales jumped over a third over the same period last year, to 97,302 units from 72,654, according to Industry experts said that the leap, which comes on top of robust 2004 growth, is right on target given growing freight volume and replacement demand but is not influenced as much by pre-buying to avoid ’07 engines.

“This is not surprising,” Arun Raha, senior economist for Eaton Corp. told Fleet Owner. “This was expected for a number of reasons. We see the economy continue to grow and generate more freight. The fleets are still older than normal so there’s pretty strong replacement demand. If you put the two together, then obviously we’d expect sales to grow.

“A third factor, and this goes along with replacement demand, is that all the trucks that were sold in the late ‘90s are about six to seven years old now,” Raha continued. “Fleets currently, according to my estimates, are over-utilized relative to normal rates, so clearly there’s room for more trucks. If fleets normally operate at 89% utilization, I’d say it’s about 95% right now.”

As a result, OEM backlogs have grown to about six months, Raha said, with a good chance that the wait could extend to seven months in 2006— especially as the deadline for 2007 emissions-compliant engines nears. So far OEMs haven’t started the 2006 model cycle, Raha said.

“The market fundamentals this year supported a large increase in truck sales,” Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), told Fleet Owner. “I’d say pre-buy is having a marginal impact on the data. (The growth) is more driven by freight capacity requirements and replacing older equipment.

“This is what [sales] should be [based on market trends] and if sales were way above that level, it’d suggest pre-buy,” Brady continued. “But the numbers are only slightly above what’s expected.”

“Right now it’s still too early to draw conclusions on pre-buy,” Eaton’s Raha said, adding that he believes truck sales will continue to stay strong in ‘06. “It’s still a very early stage of it. Pre-buy will be a bigger factor particularly in the second half of 2006.”

Based on the current forecasts that freight volumes will continue to expand moderately through 2005, come year-to-date May 2006, truck sales could be looking stronger.

“The risk right now is freight volume growth slowing significantly and carriers continuing to grow capacity at relatively strong rate,” CMVC’s Brady said. “Then there’d be lower utilization. But if we get continued moderate growth in freight volumes in the latter part of ’05, fleet capacity utilization will remain at high levels and that would imply truck sales would remain strong in ’06… But now there’s plenty of momentum in the market for ‘05.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.