June Truck Sales Rise 9.5%

This story appears in the July 21 print edition of Transport Topics.

Heavy-duty U.S. retail truck sales grew by 9.5% in June, compared with year-ago levels, and ended a streak of 17 consecutive months of contraction, according to the latest survey by WardsAuto.com.

While the growth is the first in the Class 8 market since December 2006, the number of vehicles sold by original equipment manufacturers and their dealers is largely consistent with recent months and mainly represents an improvement over a particularly poor level in June 2007.

Fleets and other truck buyers purchased 11,637 heavy tractors last month, up from the 10,632 that moved in the same month last year. For the first half of this year, Class 8 volumes are down 25.2% to 65,268 from 87,275 during the same period in 2007.

The small improvement was spread unevenly.

“Like politics, all truck sales are local, and in the Midwest, everyone is absolutely miserable,” said Gary Gibson, a Sterling Trucks dealer in Cincinnati and chairman of the American Truck Dealers trade association.

In speaking with colleagues in neighboring states, Gibson said Midwestern dealers who sell to small for-hire and private fleets and owner-operators have been rocked by low sales tallies at General Motors, Ford and Chrysler. He compared the current market with the severe 1981-82 recession.

Navistar Inc. has enjoyed four straight months of Class 8 sales growth, but spokesman Roy Wiley said the economy at large and truck OEMs specifically “still have many hurdles to overcome.”

Jack McDevitt Jr., whose family business sells five types of heavy-duty trucks through five locations in Massachusetts and New Hampshire, called current sales “very flat.”

“We’re down 18% year-to-date against 2007, and that was a dismal year,” he said, adding that the current market is as bad as any he has seen in 34 years in business.

“We’ve been riding this out for two years. I think we’ll come out of this all right and be better for it, but for now, the alternative methods we’ve used in the past aren’t working,” he said.

ACT Research Co., a market forecaster for truck manufacturing, is predicting some improvement over last year’s path but sees no evidence of strong growth.

“In June 2008, we’re incrementally above June 2007, which was the worst possible time,” said Kenny Vieth, senior analyst and partner in the Columbus, Ind., firm.

“From October 2007 through January, we saw good orders [for new Class 8s], but since February — when diesel prices started their run-up — orders have been tepid,” he said, adding that the backlog of North American heavy-duty tractors ordered but not built was about 75,000 at the end of June, compared with the March 2006 record backlog of 220,000.

Mack Trucks spokesman John Walsh said, “It remains difficult to predict exactly when the market will turn around. Demand for heavy-duty trucks in North America remains low, reflecting ongoing sluggishness in the U.S. economy, high fuel prices and softness in housing construction.

“Faced with higher operating costs and economic uncertainty, customers for the most part continue to take a wait-and-see attitude, delaying new truck purchases,” he said.

Among the eight major brands, growth at Freightliner accounts for much of June’s increase. The Portland, Ore., OEM sold 3,093 big trucks in June, a 51.1% surge over 2,047 units in the year-ago month. Freightliner declined to comment on the 1,046 extra trucks it sold.

Navistar finished in second place, selling 2,305 tractors, an 18.5% increase over 1,945 units last June.

Both Paccar Inc. brands experienced volume declines. Peterbilt Motors lost 10.3% for the month to 1,624 from 1,811. Kenworth Trucks shed 7% to 1,456 tractors from 1,565.

Mack Trucks took fifth place for June, gaining 14.9% to 1,192 big trucks from 1,037.

Volvo Trucks North America, Mack’s sister company, gained 17.6% to 1,137 Class 8s from 967 in June 2007.

Sterling and Western Star Trucks, Freightliner’s two North American stablemates within Daimler Trucks, experienced volume losses, with Sterling dropping 21.4% to 720 units from 916, and Western Star falling 43.6% to 106 heavy vehicles from 188 in June 2007.

In market share, the largest changes at the year’s midpoint affect Daimler and Navistar. Freightliner dropped 2.9 points to 25.1% of Class 8 U.S. retail sales from 28% during the first half of 2007. And Sterling and Western Star lost another 3.2 points, combined, to 6.8% from 10% during the first six months of last year.

In contrast, Navistar gained 4.7 points to 22.7% from 18%.

The other four nameplates gained less than one point each.