Annual Truck Sales Drop 11.6%
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Jan. 19 print edition of Transport Topics.
U.S. heavy-duty truck sales hit their lowest level in 16 years during 2008, falling for the second straight year, even though they made a modest recovery after hitting bottom in May.
Original equipment manufacturers and their dealers sold 133,473 Class 8 trucks for the year, an 11.6% drop from the 150,965 sold in 2007, according to a Jan. 13 report from WardsAuto.com. The last time annual sales were lower was in 1992, when OEMs sold 119,057 units.
In December, Ward’s said, retail sales increased by 5.9% compared with a year earlier, with one dealer citing an expiring tax incentive for helping to boost activity. In all, OEMs sold 12,747 vehicles, up from 12,034 during the same month a year ago.
“While we and the rest of the industry knew that 2007 volumes would be significantly lower coming out of the massive pre-buy in ’06, we anticipated relief moving through ’08. But ongoing weakness in the U.S. economy as a whole, and the dramatic de-cline in the housing sector in particular, kept demand at low levels,” said Mack Trucks spokes-man John Walsh.
“The financial crisis that occurred towards the end of the year and the increasingly large-scale recession being experienced now have exacerbated the situation,” he said.
Of the eight large U.S. and Canadian truck-making brands, seven posted volume declines last year relative to 2007. Only Navistar Inc. enjoyed a sales increase, gaining 9.2%.
For December, however, six of the brands had year-over-year gains, with only Volvo Trucks North America and Sterling Trucks in decline. Daimler Trucks said last year it will discontinue production at Sterling in the spring.
Dealer Jack McDevitt, who sells Macks, Volvos, Peterbilts, Sterlings and Western Stars in four New England locations, said he was “pleasantly surprised by a strong December. We delivered 47 Class 8 trucks, or about 50% more than the 30 we had budgeted.”
McDevitt said his staff marketed hard on the Dec. 31 expiration of the Economic Stimulus Act of 2008, which allowed a depreciation bonus on the purchase of new highway tractors.
Under normal circumstances, a truck owner can write off one-third of the value of a tractor during its first year, according to the National Accounting & Finance Council of American Trucking Associations. The 2008 act doubled that to two-thirds during the first year, NAFC said.
McDevitt said he worried the legal change might generate a “cliff event” with sales plunging in January, but so far that has not happened.
“Sales are still pretty good, as of mid-January. We’re doing better than I’d thought,” he said.
Still, with sales at such a low level, OEMs are behaving cautiously. Freightliner Trucks decided Jan. 8 it would soon lay off 2,327 workers. Most are in three North Carolina plants — Cleveland, Gastonia and Mount Holly — with an effective date of March 13. Others are in Portland, Ore., with an effective date of Jan. 30.
Engine maker Cummins Inc. said Jan. 13 it would lay off 800 employees worldwide, reduce officers’ salaries and freeze others. In 2008, Navistar announced layoffs at its facilities.
Navistar spokesman Roy Wiley said the OEM was pleased about the 2008 sales increase that led International to pick up 4.6 percentage points in U.S. Class 8 market share — from 19.7% in 2007 to 24.3% last year — but the company is still not predicting robust growth.
The Warrenville, Ill., truck and engine manufacturer said the U.S. and Canadian industry sold 244,100 heavy and medium trucks and school buses during the fiscal year ended Oct. 31. Wiley said the company projects similar industrywide sales for the current fiscal year of 244,000
to 256,000 units — flat in the worst case or a 4.9% improvement, if all goes well.
Mack’s Walsh said his company sees some room for growth.
“There is pent-up demand out there, which at some point will turn into sales. We’re also very excited about the technology path we’ve chosen for EPA’10, which allows us to improve fuel economy.” Mack, like all other manufacturers except Navistar, will use selective catalytic reduction to meet 2010 federal emissions requirements.
Referring to Freightliner’s announcement that it will drop the Sterling brand early this year, Walsh said, “The reduction in the number of players in the market leaves a void that we’re determined to fill.”
The two biggest Class 8 market share changes for the year were Navistar’s increase and Sterling’s decline. A part of Daimler Trucks, as is Freightliner, Sterling had a 5.6% share of the U.S. market last year, down from the 8% it held in 2007.
The other six brands all had share changes, up or down, of less than one percentage point.
