New Heavy-Duty Registrations Fall

This story appears in the May 27 print edition of Transport Topics.

New registrations of heavy-duty vehicles in the United States fell 11.9% in the first quarter compared with last year, according to a report from R.L. Polk & Co.

The steep decline in Class 8 registrations led to a 4.4% decrease in the total number of new commercial vehicles registered in Classes 3 through 8 during that period, according to the report.

U.S. businesses added 42,347 Class 8 vehicles during the quarter, compared with 48,093 in the year-ago period. It was the lowest level of new heavy-duty registrations since the second quarter of 2011.

“Large fleets, with more than 500 trucks, are not buying now. Their registration of Class 8 trucks was down 21.7%, year-over-year,” said Gary Meteer Sr., Polk’s account director for commercial vehicles.

While registration of new heavy-duty trucks was light, the number of vehicles exported or scrapped was even lower, enabling the nation’s total Class 8 fleet to increase by 0.65%, year-over-year, to 3.55 million heavy-duty tractors and straight trucks — the highest level since the second quarter of 2011.

Polk said in its May 20 report that the registration of all new trucks declined to 129,146 vehicles, compared with 135,090 during the first three months of 2012. Classes 3 and 5 were the only weight groups to see increases in registration volume.Polk uses data from the 50 state motor vehicle administrations.

“We’re kind of bumping along now,” Meteer said. “It’s a good level compared to very recent years, but if you look back longer to 2006, seven years ago, it’s not.”

The first quarter should prove to be the worst of the year for Class 8, Meteer said, but whatever growth comes the rest of the year will probably not be enough to erase the entire first-quarter shortfall, he said.

Looking at the months to come, Polk projects that Class 8 registrations will decline by 8.8% for the full year to 180,000, compared with 197,300 in 2012.

It also projects the combined total for Classes 3-8 contracting by 1% to 544,500 units from 550,200 last year.

Jim Shaeffer, chairman of the National Tank Truck Carriers, said some members might be holding back on vehicle purchases because of a lack of drivers. Also, a new tractor and a new tank trailer can cost $125,000 each.

“That’s a quarter of a million dollars rolling down the road. If someone buys that, you don’t want the truck to go unseated, that doesn’t work,” Shaeffer said. “There’s got to be a return on those assets, and if any one of those three parts is missing — driver, tractor or trailer — it puts you in a quandary,” he said.

Shaeffer, who is also CEO of McKenzie Tank Lines, said his fleet is replacing older equipment — sleeper cabs after 800,000 miles and day cabs after 600,000 — but not adding to total fleet size.

“This Polk report indicates to me that the situation is more widespread and problematic than I was willing to acknowledge before,” said Richard Witcher, a Walpole, Mass.-based truck dealer and chairman of the American Truck Dealers trade group.

While car dealers are enjoying growth in sales, Witcher said his fellow truck dealers are usually reporting a somewhat steady business at best. Businesses that buy trucks appear to be worried about economic uncertainty and regulatory burdens, he said, and are therefore not seeking ways to increase capital expenditures by buying a larger number of trucks.

“Business people continue to be concerned. The car guys are more excited now, but I’m not feeling warm and fuzzy about the market now,” Witcher said.

U.S. retail sales, as tracked by WardsAuto.com, have decreased even faster than registrations during the first quarter.

New truck orders, though, have improved, growing 36.2% in April to the highest level in 15 months.

Also, according to the report, used truck transactions increased by 4.7%.

For Classes 3-8, combining the used-truck increase with the 4.4% decline in new registrations yields a 0.6% increase in total quarterly registration changes.

While all six weight classes saw increases in used-truck transactions, Class 8 was the slowest, growing by just 3% over last year’s first quarter. Class 5 used deals grew by 10.5% and Class 3 by 6.5%.

“It all starts with a new truck being purchased,” Meteer said. Heavy-duty owners are not buying many new trucks, so they are keeping current rolling stock and not selling it on the secondary market.

In contrast, Classes 5 and 3 new sales are increasing, so there are also large numbers of used-truck deals afterward.

In terms of percentage change, the Canadian truck market was similar to the United States, Polk said. Class 8 registrations declined by 12.4% for the quarter and total truck registrations dipped by 4.3%.

The difference, Polk said, is that last year was the best ever for new Canadian truck registrations, whereas 2012 was decent in the United States but not at all close to the 2006 record.