Truck Sales Decline 24.3%

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

U.S. heavy-duty truck sales fell 24.3% in March to 13,101 vehicles, the seventh straight year-over-year decline, WardsAuto.com reported. Truck makers and dealers blamed the slump on ongoing economic uncertainty and regulatory concerns.

Although sales improved 4.4% from February’s tally of 12,546, the first-quarter total of 38,805 was down 17.2% from the first quarter of 2012, Ward’s reported.

The drop-off in March was the steepest year-over-year decline since October 2009. 

Jack Allen, the newly promoted chief operating officer at Navistar International Corp., said the market remains “choppy” because “there is no clear economic forecast that gives our customers the confidence to make a big, bold move.”

“Today the freight rates are good, the freight levels are good, but there are a lot of clouds on the horizon” from an economic point of view and in regard to regulatory issues, Allen said.

The pending driver hours-of-service changes, for example, have caused some customers to take “a pause” to understand what it means, he said.

David Hames, general manager of marketing and strategy at Daimler Trucks North America, said “economic concerns could still hinder market expansion,” but added that his company’s 2013 outlook “remains in line with the present commercial vehicle industry market expectations.”

Other truck makers declined comment or did not respond before Transport Topics’ deadline.

Ward’s said DTNA’s Freightliner and Western Star brands were the only nameplates to post year-over-year gains in March.

Freightliner sales edged up 0.8% to 5,061, boosting its leading market share to 38.6%. Western Star’s sales climbed 57.1% to 286, representing a 2.2% market share.

Sales of Navistar’s International brand trucks dropped 37.8% to 1,918, which accounted for 14.6% of the U.S. market in March.

Navistar said it is on track to begin delivering its first ProStar trucks with 13-liter MaxxForce engines employing selective catalytic reduction technology later this month.

The company received U.S. Environmental Protection Agency certification for the new engines last week. The lack of approved engines has slowed the company’s sales in recent months.

Ward’s also said Paccar Inc.’s two operating companies — Peterbilt Motors Co. and Kenworth Truck Co. — posted lower sales.

Peterbilt’s sales slipped 20.4% to 1,862, while Kenworth’s fell 27.4% to 1,739. The two brands ranked third and fourth, respectively, in March market share, with Peterbilt capturing 14.2% and Kenworth 13.3%.

Sales at Mack Trucks Inc. declined 17.9% to 1,121, for an 8.6% market share. Volvo Trucks sold 1,110 units in March, a 61.9% drop from the same month in 2012. Its monthly market share declined to 8.5%, from 16.8% a year ago, Ward’s said. Mack and Volvo are  owned by Sweden’s Volvo Group.

Economic uncertainty continues to hold back industry sales volumes, said Jeff Arscott, vice president at The Pete Store, a chain of nine Peterbilt dealerships stretching from Georgia to Delaware.

“I think people are still nervous,” he said. “There’s still a good deal of uncertainty about where the economy is going, and that’s certainly the biggest factor.”

Pete’s March sales were down, but comparable with a year ago, Arscott said. February, however, was a strong month, and the dealer has a  backlog of orders in the pipeline, he added.

Arscott acknowledged that recent sales levels at his company are not necessarily consistent with what other dealers have experienced.

Some smaller trucking companies are still holding off on purchasing new equipment, he said, but big carriers are buying “because their maintenance costs are creeping up above what new equipment would cost.”

In contrast to the latest retail sales figures, new factory orders for Class 8 trucks have held steady, surpassing 20,000 in North America in each of the past six months, according to ACT Research Co.

Arscott said the new orders coming in likely represent “sold trucks,” rather than dealerships stocking their yards with equipment.

“Dealers aren’t stocking trucks like they used to,” he said. “Retail walk-in business is dead. I need to keep trucks on the ground to show people, but with lead times as little as they are, I can order a truck exactly the way you want it in four to six weeks.”

Dick Witcher, chairman of the American Truck Dealers, said declining truck sales are occurring at a time when interest rates are low, 50% depreciation is available and engines are performing better than they did during the previous phase of emissions regulations.

“What more ideal time is there to buy a truck? All of the factors are there that would say, ‘buy a new truck,’ but they’re not, so there is concern on my part that there’s been a paradigm shift in the acquisition thinking,” said Witcher, CEO of Minuteman Trucks Inc., a Navistar dealer in Walpole, Mass.