A Good Time for Mack: Orders Surge 73% in Third Quarter
Mack Trucks is hauling a heavy payload of orders, following a robust third quarter in which the manufacturer that assembles its vehicles in the Lehigh Valley received a flurry of interest from customers.
Mack picked up 6,763 orders during the third quarter, a 73% jump from the year-earlier period when it collected 3,903 orders, according to a report released Oct. 20 by Mack’s parent company, Sweden’s Volvo Group.
That comes on the heels of a 58% increase during the second quarter and, through September, Mack is riding a 53% jump in orders, a solid barometer of future deliveries.
In the third quarter, Mack delivered 5,100 trucks to customers, a 29% increase that puts the manufacturer closer to last year’s delivery count through nine months.
The report reinforces recent momentum for Mack, which unveiled its new highway truck, Anthem, last month and recently hired another 150 employees at its Lower Macungie Township, Pa., assembly plant to help meet demand. Mack spokesman Christopher Heffner said the plant now employs about 1,950 people — and its payroll is expected to grow moving forward.
“To align with changing market conditions, we will be adjusting production and hiring additional workers in the near future,” Heffner said. “We are still finalizing our production plans, so we do not yet know how many positions will be available.”
Full production of the Anthem won’t begin until the first quarter of 2018, but the truck represents Mack’s re-entry into the long-haul segment, which accounts for about 50% of the overall heavy-duty truck market.
While the long-haul and regional haul markets are on the upswing in North America, Volvo said the construction segment has also been performing well, something that has benefited Mack as the top player in that slice of the market. With improving economic conditions, increasing freight rates and stabilizing used-truck prices, Volvo upgraded its 2017 North American retail sales forecast to 235,000, up 10,000 from its previous estimate.
Next year is looking even better.
Transportation equipment analysts at Stifel now expect heavy-duty truck production in North America to total 280,000 units next year, up 20,000 from their previous outlook.
“We believe [heavy-duty truck] orders will be strong this fall,” Stifel analysts wrote in a recent report. “We believe large fleets will be the biggest contributors to incremental demand this year, following restrained equipment purchases in the prior two years.”
Among the reasons for optimism, according to Stifel, are improving freight volume, increasing spot rates and the impending electronic logging device mandate, which is slated to take effect in December and requires the device be installed on trucks to monitor how long drivers stay behind the wheel.
What Mack is looking for in an improving heavy-duty truck industry is a gain in market share, which won’t come easy. Through September, Mack’s market share in North America was 7.7%, virtually flat from 7.8% a year earlier.
While Mack is hoping to separate from the pack with its Anthem tractor, which has a 70-inch sleeper option, Stifel notes that several manufacturers have rolled out new heavy-duty products lately, including Freightliner, Navistar and Volvo Trucks.
According to Volvo Group President and CEO Martin Lundstedt, the launch of the Volvo VNL series and the Mack Anthem mark “the biggest upgrade of our North American truck range in 20 years.”
While Stifel said Volvo’s over-the-road trucks were “overdue for a refresh,” analysts wondered whether the new Mack Anthem, which shows well and has the perk of a familiar Volvo powertrain, could pit Mack Trucks against Volvo Trucks in the battle for market share.
“We wonder to what degree share gains at Anthem will cannibalize share at Volvo-branded trucks, as 60% of the company’s distribution is in dual-branded dealerships,” Stifel analysts wrote.
