Feb. Truck Sales Fall 37.9%; Hopes for ’08 Rebound Waning
By Jonathan S. Reiskin, Associate News Editor
This story appears in the March 24 print edition of Transport Topics.
The heavy-duty truck sales drought continued into February, with year-over-year results declining for the 14th consecutive month, and some analysts are now predicting that any recovery won’t occur until late in the year.
WardsAuto.com reported on March 12 that original equipment manufacturers and their dealers sold 10,229 Class 8 trucks to U.S. buyers in February, a 37.9% drop from the same month in 2007, and that the total for the year’s first two months was down by 43.4% from last year.
The January sales level of 9,600 units was the lowest point so far during the slump.
Although orders for new Class 8 trucks increased from October through February, that has yet to translate into increased sales. In a related development, truck dealers reported that financing for new purchases has tightened incrementally as lenders seek to exercise more caution in the wake of the national credit crunch.
“We anticipate that the total North American heavy-duty truck market in 2008 will be very similar to the one experienced last year — in other words, ‘flat’ at approximately 208,000 units,” said Mack Trucks spokesman John Walsh.
“It’s difficult to say when demand will increase. Certainly, how the economy evolves will be a critical factor,” Walsh added.
“I’d love to tell you there will be improvement by the tail end of the third quarter,” said Peterbilt dealer George Grask, “but I haven’t seen anything to lead me to that belief.”
In addition to owning dealerships in Cedar Rapids and Davenport, Iowa, Grask is chairman of the American Truck Dealers trade association. He said the Iowa economy is generally sound, buoyed by robust demand for corn and soybeans, but that has not led to better truck sales.
“The Federal Reserve doesn’t cut interest rates by 75 basis points when things are going well,” Grask remarked March 18, the day the Fed again slashed short-term rates.
“I’m expecting a change around the end of the year, simply because there should be some movement as we head toward 2010 [and the next change in federal emission standards]. There will be a little pre-buy but not like in 2006,” Grask said.
In southern Wisconsin, a Sterling Trucks dealer said he has seen customers come in to get price quotations, “but they’re not buying,” said Paul Schlagenhauf, president of Badger Truck Centers.
While he described the quotation activity as a good sign, Schlagenhauf said the quantities customers are seeking are down from their usual levels: “25 to 35 trucks, instead of 50.”
He also described lenders as being “a bit more cautious. They’re not skittish, but they’re being a bit more diligent and methodical” in reviewing loans. As Sterling is a brand of Daimler Trucks North America, Schlagenhauf uses Daimler Financial and other financial institutions.
Grask said financing “has unquestionably tightened,” with Paccar Financial and others seeking shorter payment terms or higher down-payment levels.
Paccar Treasurer Ken Gangl said his company’s finance division is a major provider of loans for Kenworth Trucks and Peterbilt Motors.
“Paccar has a very strong credit rating of ‘AA-,’ which allows us good access to the credit markets around the world. The subprime financial issues have not affected our ability to borrow or lend to the customers of Kenworth and Peterbilt,” Gangl said.
Mack Senior Vice President Kevin Flaherty said his company’s finance unit is still extending credit — but carefully. “Of course, we continue to exercise due diligence in our financing operations. We do not take unwarranted risks to foster sales.”
Kenworth General Manager Bob Christensen was slightly more optimistic, saying, “Class 8 retail sales in 2008 are expected to be in the range of 175,000 to 215,000 vehicles [for North America], reflecting continued economic softness through the first half of the year.”
Christensen said that the Class 8 order trend was worth noting. A.C.T. Research Co. shows monthly orders for new heavy-duty trucks started increasing on a year-over-year basis in October and ballooned by 92.7% in January.
However, the growth rate for orders retreated to 19.4% in February, Bear Stearns analyst Peter Nesvold reported to his firm’s clients.
In February sales, Freightliner Trucks kept its No. 1 ranking, with 2,456 U.S. units sold, but that was a 56.3% drop from a year ago.
International finished second with 2,245 Class 8s sold, a decline of 5.1% from February 2007. International’s rate of decline was the lowest of any major OEM.
Volvo captured third place because its sales dropped by only 17% from last year. It sold 1,489 big trucks in February.
Kenworth, Peterbilt and Mack took the Nos. 4, 5 and 6 slots, respectively. Their monthly sales declines ranged from 26% to a little more than 40%.
Sterling and Western Star Trucks, Daimler’s two smaller North American brands, finished seventh and eighth for the month. As with Freightliner, their sales declines topped 50%.
This story appears in the March 24 print edition of Transport Topics.
The heavy-duty truck sales drought continued into February, with year-over-year results declining for the 14th consecutive month, and some analysts are now predicting that any recovery won’t occur until late in the year.
WardsAuto.com reported on March 12 that original equipment manufacturers and their dealers sold 10,229 Class 8 trucks to U.S. buyers in February, a 37.9% drop from the same month in 2007, and that the total for the year’s first two months was down by 43.4% from last year.
The January sales level of 9,600 units was the lowest point so far during the slump.
Although orders for new Class 8 trucks increased from October through February, that has yet to translate into increased sales. In a related development, truck dealers reported that financing for new purchases has tightened incrementally as lenders seek to exercise more caution in the wake of the national credit crunch.
“We anticipate that the total North American heavy-duty truck market in 2008 will be very similar to the one experienced last year — in other words, ‘flat’ at approximately 208,000 units,” said Mack Trucks spokesman John Walsh.
“It’s difficult to say when demand will increase. Certainly, how the economy evolves will be a critical factor,” Walsh added.
“I’d love to tell you there will be improvement by the tail end of the third quarter,” said Peterbilt dealer George Grask, “but I haven’t seen anything to lead me to that belief.”
In addition to owning dealerships in Cedar Rapids and Davenport, Iowa, Grask is chairman of the American Truck Dealers trade association. He said the Iowa economy is generally sound, buoyed by robust demand for corn and soybeans, but that has not led to better truck sales.
“The Federal Reserve doesn’t cut interest rates by 75 basis points when things are going well,” Grask remarked March 18, the day the Fed again slashed short-term rates.
“I’m expecting a change around the end of the year, simply because there should be some movement as we head toward 2010 [and the next change in federal emission standards]. There will be a little pre-buy but not like in 2006,” Grask said.
In southern Wisconsin, a Sterling Trucks dealer said he has seen customers come in to get price quotations, “but they’re not buying,” said Paul Schlagenhauf, president of Badger Truck Centers.
While he described the quotation activity as a good sign, Schlagenhauf said the quantities customers are seeking are down from their usual levels: “25 to 35 trucks, instead of 50.”
He also described lenders as being “a bit more cautious. They’re not skittish, but they’re being a bit more diligent and methodical” in reviewing loans. As Sterling is a brand of Daimler Trucks North America, Schlagenhauf uses Daimler Financial and other financial institutions.
Grask said financing “has unquestionably tightened,” with Paccar Financial and others seeking shorter payment terms or higher down-payment levels.
Paccar Treasurer Ken Gangl said his company’s finance division is a major provider of loans for Kenworth Trucks and Peterbilt Motors.
“Paccar has a very strong credit rating of ‘AA-,’ which allows us good access to the credit markets around the world. The subprime financial issues have not affected our ability to borrow or lend to the customers of Kenworth and Peterbilt,” Gangl said.
Mack Senior Vice President Kevin Flaherty said his company’s finance unit is still extending credit — but carefully. “Of course, we continue to exercise due diligence in our financing operations. We do not take unwarranted risks to foster sales.”
Kenworth General Manager Bob Christensen was slightly more optimistic, saying, “Class 8 retail sales in 2008 are expected to be in the range of 175,000 to 215,000 vehicles [for North America], reflecting continued economic softness through the first half of the year.”
Christensen said that the Class 8 order trend was worth noting. A.C.T. Research Co. shows monthly orders for new heavy-duty trucks started increasing on a year-over-year basis in October and ballooned by 92.7% in January.
However, the growth rate for orders retreated to 19.4% in February, Bear Stearns analyst Peter Nesvold reported to his firm’s clients.
In February sales, Freightliner Trucks kept its No. 1 ranking, with 2,456 U.S. units sold, but that was a 56.3% drop from a year ago.
International finished second with 2,245 Class 8s sold, a decline of 5.1% from February 2007. International’s rate of decline was the lowest of any major OEM.
Volvo captured third place because its sales dropped by only 17% from last year. It sold 1,489 big trucks in February.
Kenworth, Peterbilt and Mack took the Nos. 4, 5 and 6 slots, respectively. Their monthly sales declines ranged from 26% to a little more than 40%.
Sterling and Western Star Trucks, Daimler’s two smaller North American brands, finished seventh and eighth for the month. As with Freightliner, their sales declines topped 50%.
