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Economists see milder pre-buy in ‘09

Jan. 22, 2008
LAS VEGAS. Although they cited different measures of truck sales, all four economists speaking to a group of heavy-duty vehicle manufacturers here forecast slowly recovering Class 8 truck sales in the second half of this year

LAS VEGAS. Although they cited different measures of truck sales, all four economists speaking to a group of heavy-duty vehicle manufacturers here forecast slowly recovering Class 8 truck sales in the second half of this year, followed by a modest pre-buy of trucks in 2009 ahead of new emissions regulations in 2010 and then a fall-off in sales in 2010.

In the last emissions-driven sales cycle, Class 8 truck sales rose to record levels in 2006 and then fell sharply when the emissions regulations took effect the following year. Speaking to the Heavy Duty Manufacturers Assn. meeting here this week, the panel of well-known industry economists predicted that while the pre-buy pattern would be the same in this next cycle, the swing in truck sales should be less dramatic.

Dealers will deliver 233,500 Class 8 trucks in North America this year, compared to just 204,500 in 2007, according to Chris Brady of CMVC Consulting. His forecast showed a strong rise in U.S. deliveries for the current year, more modest increases in Canadian and Mexican sales and continued export sales strength driven by the weaker U.S. dollar.

Looking to 2009, Brady predicted North American Class 8 deliveries would rise to 368,700 units and then fall to around 290,000 trucks in 2010. He estimated that 15 to 30% of 2009 sales would be trucks purchased to avoid emissions-driven price increases expected in 2010.

North American factory sales of Class 8 trucks will total 246,700 units, according to Martin Labbe of ML Assocs. While that would be significantly higher than 2007, that forecast is still roughly 10% below the five-year average for Class 8 factory sales, Labbe said.

Labbe told the group that he expected 2008 medium-duty sales to equal the five-year average with 86,100 Class 7 N.A. factory sales and 60,4000 Class 6 sales. Mid-range Class 3 through 5 N.A. factory sales will beat the five-year averages by almost 20%, totaling 222,100 units, according to Labbe.

However, Labbe cautioned that this was “a non-recession forecast.” If the U.S. experiences a recession this year, “all bets are off,” he said.

Predicting that last year’s sales weakness will extend into the second quarter of 2008 for Class 8, Kenny Vieth of A.C.T. Research told the HDMA audience that he expects stronger sales in the last half of the year to push N.A. production numbers to 235,000 units, compared to the 211,000 Class 8 trucks built in North America last year.

Longer term, Vieth expects Class 8 sales to return to “non-inflationary GPD growth of around 3%.” A “modest pre-buy” in 2009 will drive the N.A. Class 8 production numbers up to 350,000 units, followed by a fall-off to 263,000 units in 2010, Vieth predicted. Looking further out than the others on the panel, Vieth said Class 8 production activity would slowly rebound to 291,000 trucks in 2011 and 309,000 trucks in 2012.

Looking at Class 8 U.S. retail sales, Stu MacKay of MacKay & Co. told the HDMA to expect those numbers to reach between 220,000 and 240,000 trucks this year, compared to 152,000 in 2007. Pre-buy activity in 2009 should push retail sales to 280,000 to 290,000 trucks in Class 8, according to MacKay’s forecast.

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