Class 8 Registrations Rise in 1Q as Fleets Seek Out ’09 Engines

This story appears in the June 7 print edition of Transport Topics.

Registrations of new Class 8 trucks in the United States totaled 25,635 in the first quarter, a 2.5% increase from a year earlier, R.L. Polk & Co. reported.

The increase was fueled by a 30% gain in registrations of trucks with 15-liter or larger engines, which experts attributed to fleets buying 2010 trucks with in-stock older-model engines.

Polk also said the total number of new Classes 3-8 vehicles registered during the quarter was 79,650, down 8% from the 86,550 registered in the same quarter during 2009.

Although registrations remain at the lowest levels since the first quarter of 1992, Polk said the market appeared to be stabilizing.

“It’s especially significant that Class 8s have gone to positive because they are usually a leading market indicator in trucking,” said Gary Meteer, account director for Polk’s commercial vehicles and aftermarket groups. “Longhaul trucks start moving goods before they find their way into general commerce. Leasing companies and big haulers are getting inquiries about freight loads, so they feel they have to start putting in fresh orders for new tractors.”

The increase in Class 8 registrations, the only weight class to post a year-over-year gain, appeared to be more the result of available inventory than a new trend.

“We do not believe the increased demand for 15-liter engines in the first quarter is a trend but is primarily due to the purchase of trucks with pre-2010 emissions, 15-liter engines available in dealer inventory,” W.M. “Rusty” Rush, chief executive officer of Rush Enterprises Inc., told Transport Topics. Rush is the largest Peterbilt dealership in the United States.

Under U.S. Environmental Protection Agency regulations, as long as an engine was completed by Dec. 31, 2009, it’s legal to install it in current-year trucks.

“Trucking companies stocked up on a lot of 2009 engines to put in the new trucks early this year,” Duane Kyrish, dealer principal of Longhorn International Trucks Ltd., told TT. Based in Austin, Texas, his company has nine locations.

“In our case, Navistar had a supply of both its MaxxForce and Cummins engines,” Kyrish said. “I know for a fact that my places have sold about 400 2010 trucks with Cummins ISX 15-liter engines in them, and other dealers have been doing the same.”

Chris Brady, president of Commercial Motor Vehicle Consulting, Manhasset, N.Y., said the increase in large engines has to do with who is in the market for new trucks.

“The long linehaul guys have much less flexibility in extending the rotation of their fleets, given the amount of miles they put on trucks each year,” Brady said. “These are the fleets doing most of the buying, and many choose the 15-liter engine because it gives you the flexibility of going over the Rockies, as well as giving a wider range of what you can carry.”

Polk’s report found that fleets with 500 or more tractors posted the largest increase in new registrations at 9.3%.

Owner-operators and fleets with between one and five trucks registered 7.1% more trucks in the first quarter than a year earlier, Polk said.

Brady noted that owner-operators are another strong source of buyers of larger engines.

“O-Os will spec the highest horsepower engines because they think it increases durability and the life of their trucks,” Brady said. “If a truck is down, not generating revenue, an O-O has no other revenue, so that I think it is a good business decision, and also, 15-liter engines have a better trade-in value.”

Polk said there were positives in the month-to-month figures. The report said March registrations declined 0.8% from March 2009, while for February, the drop was 6.1% and, in January, it was 15.6%.

“While we haven’t seen a trend that things are definitely marching upward, the continued decline has stopped and some sectors of the market are coming back,” Meteer said.

Polk predicted that Class 8 registrations will rise by more than 8% to 110,000 in 2010, compared with last year, when they totaled 101,200. Polk also said registrations of all new trucks will rise to 340,000, up from 324,000 in 2009.