Kenworth GM Warns Truck Market Woes to Continue
He estimated that sales of new big-rig Class 8 trucks will total 130,000-150,000 units this year, down from 211,507 in 2000. And he disagreed with estimates calling for a strong rebound next year to sales between 200,000 and 230,000 units.
“We’re in for an extended downturn and the problem won’t go away soon,” he said. Because of manufacturers’ programs to buy back used trucks, he noted that “the ‘99 models are going to come back next year, and unless someone can convince users to keep their trucks longer, [the industry] can expect to see 50,000, 60,000, 70,000 or 80,000 excess (used) trucks next year” on the market.
Truck sales for the rest of the year will depend on changes that are taking place in several key economic areas, said Caudill.
Interest rates are no longer negatively impacting truck buying decisions, given the three reductions the Federal Reserve Board has made since the beginning of the year.
However, trucking insurance rates have continued to rise, going up 50% to 100% in some cases, he noted. Finally, although the fuel price has leveled off and even dropped some, future stability is doubtful.
But, said Caudill, the problem is still the oversupply of existing Class 8 trucks. “They will continue to be an alternative to new trucks.”
Kenworth, like all truck makers, is closely following developments as diesel engine manufacturers try to meet the 2002 deadline for the new federal emission levels. According to Caudill, those developments could have a major impact on future truck design — or not.
The concern among truck makers is whether the upcoming lower-emission engines will require redesigned engine compartments, but that would not be the case with Kenworth trucks, according to Caudill.
Several engine original equipment manufacturers, such as Cummins and Detroit Diesel, are attempting to reduce nitrogen oxides emissions by the use of exhaust gas recirculation. EGR is expected to require greater cooling capacity, which in turn may require truck makers to redesign the engine compartment to accommodate larger radiators and other components.
“There will be no change in our styling with the system we’re developing,” he said.
There is another engine issue, though, that may impact Kenworth. Caterpillar recently announced that it believed it could meet the 2002 emission standards without EGR. However, the company is seeking a one-year extension from the Environmental Protection Agency to complete the development.
The Caterpillar engine is used in 70% of Kenworth’s trucks. If it does not receive the extension from EPA, Kenworth and other truck makers using Caterpillar engines could have to look for replacement models that meet the standards.
“We’ll have to wait and see,” said Caudill. “The Caterpillar development sounds like a breakthrough. But if Caterpillar is wrong, it could put Cat, and then the OEMs (original equipment manufacturers), in a hole.”
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