Class 8 Registrations Decline 1.5%, Polk Report Says

This story appears in the Sept. 10 print edition of Transport Topics.

The nation’s heavy-duty truck fleet shrank 1.5% in the second quarter from a year earlier to 3.5 million vehicles, as companies continued purging older trucks but held off buying new ones in response to slow economic growth and regulatory uncertainty, R.L. Polk & Co. said in a new report.

The number of Class 8 vehicles in operation fell by about 54,000 units from 3.6 million in the second quarter of 2011, reversing a slight uptick in this year’s first quarter and resuming a downward trend that began in the fourth quarter of 2008.

“The commercial vehicle population continues to get younger as the extremely older models are taken out of service and replaced with new and clean used equipment,” said Gary Meteer, director of R.L. Polk’s Commercial Vehicle Group in Southfield, Mich.

Over the past six months, Meteer noted, the number of pre-2000 model Class 8 trucks has declined by 5.5%, while the overall number of Class 8 trucks has “been flat.”

Since reaching a peak of 3.65 million registered vehicles in the fourth quarter of 2008, the number of Class 8 vehicles in operation in the United States has fallen by 151,000 units, or 4.1%, Polk’s data show.

Then, a global financial crisis and recession cut deeply into freight volumes, forcing many fleets to cut back on purchases of new trucks.

While sales and new truck registrations are now increasing, it’s not enough to offset the disposal of older vehicles.

“Our analysis indicated that new Class 8 registrations are basically replacing units coming off of contracts, and there is no expansion to the Class 8 vehicle population,” Meteer said.

Class 8 vehicles in Polk’s analysis include vocational and off-road trucks, transit buses and recreational vehicles, in addition to over-the-road tractors and straight trucks.

Overall, new registrations for Classes 3-8 vehicles increased 20.3% to 263,000 units in the first six months of 2012 from 218,566 units in the same period in 2011. Registrations were higher in the first quarter than the second quarter, however, indicating “a less optimistic picture” going forward, Meteer said.

Although truck tonnage continues to grow, orders for new trucks have fallen in recent months as potential buyers look for signs of stronger economic growth and wait for the outcome of the November elections.

“Trucks are big-ticket items and this is not an environment in which to make major capital expenditures,” said Dan Goodwill, a transportation industry consultant based in Toronto.

Goodwill made his comments as part of a recent online discussion about truck sales.

David Wozniak Jr., vice president of M.C. Van Kampen Trucking in Wyoming, Mich., said financing is also preventing some owner-operators and small fleets from buying more trucks.

“Although rates are low, truck pricing is significantly higher for a new truck than a few years ago,” Wozniak said. “Freight rates have not kept pace with the rising cost of equipment and fuel.”

Mike Buck, president of MCB Consulting, Saint Simons Island, Ga., said current economic conditions have also led to more stringent credit controls on borrowers.

“The high-leveraged firms are hesitant to procure new equipment in fear of being rejected and negatively impacting their credit rating. Additionally, there is the fear of diminishing freight demand and being burdened with a fixed cost of new equipment if the economy takes yet another plunge,” he said.

Industry consultant Stu MacKay of MacKay & Co. in Lombard, Ill., said he expects to see a gradual expansion of trucking fleets over the next few years, with the total number of trucks in service in the United States reaching 3 million in 2017 from 2.83 million in 2012.

“We’re in a flat period now,” MacKay said. “It’s all predicated on a recovery in the economy.”

MacKay said although some fleets are choosing to keep trucks in service longer, a rising level of new truck purchases over the next five years should drop the average age of vehicles from 9.7 years to 9.35 years.

Since 2009, according to the Polk report, the number of Classes 3-8, pre-2000 model year trucks in operation declined by 1.1 million vehicles to 4.65 million units.

The latest Polk report also shows the growing importance of lease-rental companies in the market. These firms accounted for 23.7% of 263,000 Classes 3-8 trucks registered through the first half of 2012. That’s up from 22.1% in the same period a year ago and 17.2% in 2010.

Individuals accounted for 19.9% of new vehicles registered in the first half of 2012, compared with 19.4% in 2011 and 21.3% in 2010, Polk said.

General freight haulers ranked third, accounting for 12% of new truck registrations in 2012, down from 12.6% a year earlier.