Medium-Duty Buys Rise 5.9% in September

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

Medium-duty U.S. retail truck sales increased 5.9% in September from a year earlier, as Classes 4-5 surged, but Class 6 sales slumped, WardsAuto.com reported.

Truck buyers purchased 12,057 new Classes 4-7 units last month, up from 11,389. For the first three quarters of 2012, sales have risen 10.8% to 112,099, Ward’s said.

“The medium market seems like it’s been pretty consistent throughout the year,” said Andy O’Donnell, general sales manager at Valley Ford Truck Inc., Cleveland.

Even so, truck buyers are “a little bit more conservative” right now because they’re “in the dark as far as who’s going to be in office next year and where the economy’s going,” said O’Donnell, whose company also operates affiliated Freightliner and Hino dealerships.

Ward’s data show that medium-duty sales have increased year-over-year in each of the first nine months of 2012, ranging from an 18.8% increase in February to a 0.2% uptick in June.

The September gain in medium-duty sales contrasted with Class 8 sales, which fell 9.1% to 14,491 last month in the first year-over-year decline since December 2009 (10-15, p. 7).

Ward’s said sales in Classes 4 and 5 jumped 34.1% to 5,712 in September, the strongest year-over-year growth rate in that category since a 48.5% spike in May.

O’Donnell said Classes 4-5 sales compare favorably with a year ago, due in part to supply problems in 2011 related to the earthquake and tsunami in Japan.

Class 6 sales, however, dropped 27.9% to 2,829 in the largest decline since September 2009, when sales fell 30.3%. On a year-to-date basis, Class 6 sales are down 4.6%.

Meanwhile, Class 7 sales grew year-over-year for the ninth straight month, rising 9.5% to 3,516.

Daimler Trucks North America said during an Oct. 8 press conference in Las Vegas that it had lowered its full-year projection for industrywide U.S. sales of Classes 6-7 trucks.

The truck maker revised its estimate to 89,000, from a projection of 100,000 six months ago. In 2011, Classes 6-7 sales totaled 81,889, according to Ward’s. Daimler also said it has overtaken Navistar as the market share leader in Classes 6 and 7 combined.

“We’ve had good success in Classes 6 and 7 in North America this year, and we would like to pull away from Navistar and add to our lead,” Martin Daum, CEO of DTNA, said at the press conference.

Through September, DTNA’s combined sales in Classes 6-7 totaled 24,690, representing 37.4% of the market, Ward’s data showed. Navistar is just behind with 23,913 sales, which makes up 36.3% of the market.

Navistar did not respond to a request for comment by Transport Topics’ deadline.

During 2011, Navistar led with 31,738 sales and 38.8% market share, compared with 28,849 sales and 35.2% for DTNA, according to Ward’s.

Steve Tam, vice president at ACT Research, Columbus, Ind., connected the continued stability of medium-duty truck sales to moderate improvement in the housing sector.

“As the housing market has become less of a drag on the economy, that’s provided the opportunity for medium-duty truck sales to stretch their legs a little bit,” Tam said.

Tam also said the medium-duty market experienced a more protracted downturn than the Class 8 market, which has caused more companies to delay their replacement cycles.

“We’re getting to the point, when push comes to shove, where they have just driven the wheels off of these trucks and they can’t go much longer doing that,” he said.

Darek Zmigrodzki, who sells Classes 3-5 vehicles at Mid-State Isuzu, Worcester, Mass., said he’s also seen customers extend their trade cycles.

“What we’ve seen over the last few years is people holding onto their trucks longer and longer, and we’ve seen a considerable shift from new to used, even with customers who historically bought new trucks,” he said.

Many companies also have turned to truck leasing, Zmigrodzki added. “Everyone’s trying to save a penny.”

O’Donnell of Valley Ford Truck said some customers have reduced costs by purchasing smaller trucks than they have in the past “and making do with it.”

“In looking at the overall life cycle savings, it’s smaller wheels and tires, cheaper brakes, and the engine consumes less fuel,” he said.

John Marshall, senior vice president of sales and marketing at Utilimaster Corp., Wakarusa, Ind., which builds delivery vehicles and truck bodies, said some customers have taken divergent approaches to reducing their costs.

“Depending on what the fleet delivers, we’ve seen some folks move to smaller vehicles to try to capture larger fuel economy gains,” he said. “At the same time, I’ve seen other fleets consolidate and move to larger vehicles, so they will actually have a larger density on their route.”

Associate News Editor Jonathan S. Reiskin contributed to this story.