Class 8 Sales Gain in January

This story appears in the Feb. 22 print edition of Transport Topics.

U.S. Class 8 retail truck sales eked out their first year-over-year gain in 13 months in January, inching up 0.2% compared with January 2009, WardsAuto.com reported.

In the first month of 2010, truck makers and their dealerships sold 7,387 big trucks, narrowly topping the 7,374 units sold in January 2009, Ward’s reported. It was the first year-to-year gain since December 2008.

Although January’s tally beat the year-ago total, Class 8 truck sales dropped 36% from December’s results. December 2009’s total of 11,537 units was the year’s high-water mark and the only month of ’09 in which sales rose above 10,000 units, according to Ward’s.

Truck dealers and industry watchers said that January sales got a boost from a small-scale pre-buy that materialized late last year and lingered into 2010. These people expected that boost to fade before a real recovery begins.

The pre-buy by fleets is designed to beat the higher prices and un-proven track record of a new generation of engines mandated by changes in U.S. emissions rules.

“We’re still seeing the last vestiges of the pre-buy,” said Kyle Treadway, president of Kenworth Sales Co. in West Valley City, Utah. “The last quarter spilled over into January.”

Rusty Rush, president and chief executive officer of Rush Enterprises, noted the same spillover during his company’s latest earnings call. “It’s the delivery of the pre-2010 emission vehicles,” Rush said. “It’s the delivery of the old units that were ordered back in October and November.”

Rush and Treadway both said they expect that the lingering effects of the order spike late last year will buoy sales through the first quarter, but the picture gets bleaker after that.

Rush said that “we do not believe any sustainable increase in retail sales will occur until late in 2010.”

Rush added that the new truck market will be “extremely sluggish in the second and third quarters” as 2010-model engines will take time “to gain acceptance in the marketplace.”

“I don’t think any of us foresees a sharp return to strong sales in the immediate future,” Treadway said.

Kenny Veith, partner and senior analyst with ACT Research, Columbus, Ind., said that as the momentum of the minuscule pre-buy fades, truck makers and their dealerships will face a demand vacuum that is unlikely to abate until sometime in the second half of the year.

That’s going to occur because orders for Class 8 trucks in January hit their lowest level since 2002, Veith said.

Orders of trucks bound for the United States and Canada, where the U.S. Environmental Protection Agency’s latest emissions standards already are in effect, “took it on the chin” in January, Veith said.

U.S. orders for heavy-duty trucks fell to 3,800 in January, according to ACT. In October, when truck buyers began angling for pre-2010 trucks, orders hit 16,400 units.

Nevertheless, “I think we’ll continue to have above order-level sales for the next several months,” Veith told Transport Topics. Then, in the second half of the year, the dam could burst.

Internal estimates at ACT show an equalization of truck capacity with tonnage by the third quarter, after which “we’re going to go from everybody saying ‘I don’t want any trucks’ to everybody saying ‘I want a truck now’.”

In its January truck sales report, Ward’s reported that all brands locked in sales gains except for the three owned by Daimler Trucks North America.

Sales of Daimler’s Freightliner brand trucks fell 10.7% year-over-year but still accounted for the single biggest slice of January Class 8 sales at 2,256 units, about 30.5% of the market. Freightliner sales accounted for almost all of Daimler’s 32.4% share of the U.S. market for new trucks.

Sales of Daimler’s discontinued Sterling brand came in at 83 trucks in January, 76.6% below year-ago levels. Western Star, Daimler’s severe-service brand, moved 55 trucks, a 36% drop from last year, according to Ward’s.

Sales of Navistar Inc.’s International brand trucks rose to 2,191 units, a 3.8% increase over January 2008. Navistar had 29.7% of the market last month, Ward’s said.

Peterbilt Motors, a Paccar Inc. company, was third in sales by brand with 850 units sold in January — 14.7% more than last January.

Kenworth Truck Co., also owned by Paccar, was next on the Ward’s list with 727 heavy-duty trucks sold last month. Kenworth’s January total was 11.2% higher than last year. Overall, Paccar had 21.3% of the market in January.

Volvo AB’s two U.S. brands, Volvo Trucks North America and Mack Trucks, respectively moved 672 and 553 units last month. VTNA sales rose 24.4% year-over-year, and Mack sales rose 53.6%, Wards said.

Together, the Volvo companies accounted for 16.6% of the U.S. Class 8 market last month.

Representatives of Daimler, Paccar and Volvo did not respond to requests for comment.

A Navistar spokesman said that the company remains wary of the shaky U.S. economy, and that it was still unclear whether truck sales had at last scraped the bottom of the barrel.

“It’s still too early to say,” said Roy Wiley, spokesman for Chicago-based Navistar. “Hopefully, it is the bottom.”