2011 Truck Orders Soar 68.6%; Industry Prospects Seen Bright

Orders for new Class 8 trucks jumped 68.6% last year from 2010, as the year closed with an 11.8% increase in December from a year earlier, according to ACT Research Co.

North American customers, mostly in the United States, ordered 305,393 new Class 8s last year, compared with 181,181 in 2010, ACT Research said Jan. 5.

Several dealers, two truck makers and two analysts predicted that the high level of orders in December — 30,100 — would lead into an even better 2012, although they said an expiring tax break accounted for some of the late-year orders.

“Our activity in December was up dramatically in our markets,” Duane Kyrish, dealer principal of Longhorn International, Austin, Texas, told Transport Topics. “We had a strong sales month, and we got some significant orders as well.”

The company operates nine locations in Texas. Navistar Inc. builds International trucks.

Some in the industry had ex-pressed concern when new Class 8 orders dropped to 20,700 in November, down 21.2% from the previous November and the first decline in 13 months (12-12, p. 1).

In December 2010, truck makers received 26,928 Class 8 orders, ACT said.

Kyrish said he “ramped up” his inventory toward the end of 2011, preparing for 2012, and sold a lot of them in December.

“A lot of those were for taxpaying, to get in under the wire for 100% deprecation,” Kyrish added.

The ability to write off 100% of capital purchases in the year they were bought ended Dec. 31.

Kyle Treadway, president of Kenworth Sales Co., West Valley City, Utah, said sales increased in December after a November dropoff. “I think the biggest overall reason was the ramifications of the accelerated tax depreciation,” Treadway told TT.

“There still is a lot of activity,” Kyrish added. “We’re quoting a lot of trucks. It’s better than January of a year ago, and I think that 2012 is going to be a very good year.”

John Walsh, vice president for marketing at Mack Trucks Inc., told TT that November’s decreases “reflect a normal fluctuation in an increasing market, which continues to be driven primarily by replacement demand.”

“Smaller fleets have started to come back into the market,” Walsh added. “Conditions appear favorable for another good year in 2012.”

Brandon Borgna, spokesman for Volvo Trucks North America, told TT the company expects “replacement demand, particularly from highway fleets, will stretch into 2012, setting the stage for another strong year.” Volvo and Mack Trucks both belong to Sweden-based Volvo AB.

Announcing that Daimler Trucks North America would add a second shift at its North Carolina Freightliner plant, Mark Lampert, DTNA’s senior vice president of sales and marketing, predicted that U.S. Class 8 sales would top 253,000, and said demand was so strong that Freightliner’s 2011 production “was essentially sold out” by mid-May last year (see story, p. 3).

Other truck makers did not comment.

Steve Tam, vice president for the commercial vehicle sector at ACT, Columbus, Ind., said that “December’s increase of order intake was better than anticipated.”

“If you look at December and the 68% increase for the year, they say to me that truckers feel much more confident about their business and that they can finally become comfortable replacing some of the aging equipment,” Tam told TT.

“My view of the market is that, as long as freight continues to grow, even at its current sluggish rate, we’ll see healthy truck sales in 2012, above 2011 and a pretty decent increase, 25% over last year,” Chris Brady, president of Commercial Motor Vehicle Consulting, Manhasset, N.Y., told TT.

A couple of dealers were not so rosy in their outlooks.

One dealer with six locations, who asked not to be identified, said he had seen no order increase in December.

And Scott Blevins, chief operating officer of Worldwide Equipment Inc., Prestonsburg, Ky., said he thought speculation was part of the reason for the high order numbers.

“I don’t think that the orders coming in today are solid orders,” Blevins said. “I think there is a lot of speculation in the marketplace, more in the dealer sector than the fleet. So I’m trying every day to ward that off.”

“I don’t know if there was a noticeable change in activity, because we had a good November and a relatively good month in December,” Blevins told TT.

Worldwide Equipment operates 15 dealerships in six states, selling new Class 8 Kenworth, Mack and Volvo trucks.

“Year-over-year, our business combined has been up between 4% and 5% in Class 8, from all three brands,” Blevins said.

Through November, U.S. truckers bought 150,419 Class 8 vehicles, a 57.7% increase from the first 11 months of 2010, WardsAuto.com reported (12-19&26, p. 1).

“We had a good year last year, definitely,” said Eric Jorgensen, CEO of JX Enterprises Inc, a Peterbilt dealer based in Pewaukee, Wis., which has 15 locations in four states.

Peterbilt and Kenworth are subsidiaries of Paccar Inc.

“In fact, we had quite a number of stock trucks at the end of year, about 150 units, which we haven’t had for a long time, and I was very, very concerned, because activity started to slow down in November,” Jorgensen told TT.

“We put out a targeted incentive program to move about 40 of them, and that inspired a lot more activity, and we worked our way through much of that equipment,” he added. “If November was weak, December was very strong.”