U.S. Class 8 Fleet Decline Ends as New Sales Rise, Polk Says

This story appears in the Feb. 28 print edition of Transport Topics.

The U.S. Class 8 truck fleet appears to have halted a lengthy decline, according to new registration data for the last quarter of 2010, and fleet executives, truck dealers and analysts all said vehicle sales should continue to rise.

R.L. Polk & Co. reported that Class 8 vehicles in operation totaled about 3.57 million trucks in the fourth quarter. Although that total was not quite a 0.1% increase from the year-ago period, it did reverse four straight quarters of year-over-year declines driven by the recession. In the third quarter of 2010, the total fleet shrank by 1.7%.

Gary Meteer Sr., the Polk account director in charge of the Feb. 16 registrations report, said he thinks vehicles in operation probably have hit bottom.

“It’s stable now. I think this is probably it. We expect this year will see another 13% in growth of new truck registrations over 2010, with a lot of Class 6-8 vehicles, especially,” Meteer said. He cautioned, though, the 2010 registrations, while better than the year before, are only at the 1992 level by historical standards.

The Polk report also said there were 1.04 million new and used Class 3-8 truck transactions last year, an 18.2% increase from 2009. Contrary to historical standards, though, 64.7% were used-truck purchases, and 35.3% were for new Class 3-8 vehicles. Of all the used trucks that changed hands, Meteer said, about half of them were Class 8 vehicles.

“I’ll say, at this point, the tide has turned,” said Kyle Treadway, dealer principal for Kenworth Truck Sales Co. in Salt Lake City and chairman of American Truck Dealers. “We’ve seen erratic, small incremental growth over the last 11 to 12 months, and with a lot of regional differences.”

Rising freight levels, coupled with the demise of a number of fleets during the recent recession, are apparently driving the new fleet growth.

Treadway said he expects his own sales, mainly heavy-duty vehicles, should grow by about 30% this year over 2010. He said used-truck prices have increased up to 20% from a year ago to the end of last year, and that has paved the way for new-truck sales to resume.

U.S. Class 8 sales peaked in 2006 and then plummeted through 2009.

“Freight volumes are better and our customers say their orders are filling up, so we have plans to buy 300 trucks this year,” said Robert Ragan, chief financial officer of flatbed carrier Melton Truck Lines Inc.

“I think our industry has bottomed out on equipment purchases,” said Kevin Burch, president of Jet Express Inc. “I sense that people are putting in new orders for power units and trailers.”

The immediate past chairman of the Truckload Carriers Association, Burch said he is in frequent contact with other association members and there is talk of equipment purchases.

“I’m driving from Michigan, where we just got some new business, back to Dayton to start it up,” Burch said in a cell phone interview, adding that Jet will return to a more typical purchasing plan for equipment than in recent years.

ACT Research Co., Columbus, Ind., looks at orders for new North American trucks and sees them growing, a process that leads to more production and sales.

“A handful of fleets are talking about small increases in size,” said ACT Vice President Steve Tam. “We hear of them bringing in a few more tractors than they plan on retiring, so we don’t expect a further decrease.”

Orders for new, heavy-duty North American tractors rose 320% in January, year-over-year, and while a percentage that high is not typical, “there has been a nice run-up in orders,” Tam said. Class 6 and 7 trucks are also in greater demand but not as much as heavy-duty vehicles, he said.

“We’ve seen a pretty significant upturn in activity. Our backlog is increasing, and I’m encouraged by the economic activity,” said Dick Witcher, the ATD vice chairman who sells Internationals and Fords at Minuteman Trucks in Walpole, Mass. Witcher said that he and other dealers are carrying more inventory now and seeing more orders.

The Polk report said Class 3 trucks drove more than half of the improvement in new vehicle registrations. Of all the new trucks registered in the United States last year, 112,100 were in Class 8, up from 103,500 in 2009. Class 3 was the most populous group with 120,800 registrations last year, up from 96,200 in 2009. Overall new truck registrations rose to 367,400 from 327,400 the year before, a 12.2% improvement.