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Truck sales projected to be soft into 2010

June 16, 2009
Sales and production of commercial trucks will remain decidedly soft for the remainder of 2009 and well into 2010, according to new analysis by ACT Research Company (ACT)

Sales and production of commercial trucks will remain decidedly soft for the remainder of 2009 and well into 2010, according to new analysis by ACT Research Company (ACT).

In its recently published North American Commercial Vehicle Outlook, ACT forecasts 2009 Class 8 retail sales will be 43% below 2008 levels and only recover about half of that decline in 2010, with medium-duty Class 5-7 retail sales projected to be down 26% for 2009 and grow only 11% next year, said Kenny Vieth, partner and senior analyst with Columbus IN-based ACT.

"I really don't see how sales can get better any quicker," Vieth told FleetOwner. "According to our modeling, freight volumes are down 10% to 11% year over year from 2008 to 2009. Anecdotally, we've also heard there have been a lot of renegotiated [freight] contracts this season, with pricing being set at a lower base. Fleets are under a lot of monetary pressure right now."

The cost of 2010 emission control technology is also a huge issue, according to Vieth. "For example, by the time you add in the $9,600 extra per truck for SCR [selective catalytic reduction] technology that Volvo is charging to the FET [federal excise tax] and sales taxes, you're looking at a $12,000 increase for a new 2010-compliant truck," he explained. "That's not going to make people rush out and buy a new truck."

He also noted that orders failing to arrive in sufficient numbers through May all but removed the possibility of an EPA 2010-driven pre-buy bounce in 2009, and with significant excess capacity in trucking and no expectation of a strong rebound coming out of the recession, the Class 8 fleet will end 2010 with its oldest average age on record.

"By the end of 2009, the U.S. Class 8 fleet will be the oldest it's ever been since 1986 -- 6.4 years," Vieth said. "By the end of 2010, we project the fleet will be 6.6 years old." He stressed, however, that the chronological age of these trucks won't necessarily be reflective of their operating condition, as many Class 8 vehicles right now are being significantly under-used -- or are parked and not being used at all.

ACT's analysis also indicated that that trailer demand is being significantly impacted by the steep recession, coupled with structural issues that have increased the average life of trailers. ACT forecasts total trailer shipments will fall 49% in 2009, reaching the lowest levels in 47 years. However, the firm projects a much improved 2010 with total trailer shipments rising 79%.

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