U.S. Heavy-Duty Fleet Expands at Fastest Rate Since Late 2009

The nation’s heavy-duty truck fleet grew in the first quarter for only the second time over the past 30 months, climbing 0.37% to 3.53 million vehicles registered on March 31.

The 13,000-truck increase from 3.52 million in the first quarter of 2011 was the most growth since the third quarter of 2009, according to a May 21 report by R.L. Polk & Co.

Polk, which is based in Southfield, Mich., also said that registrations of used Class 8 truck sales are declining as new vehicle registrations rise and that leasing companies are driving a lot of the growth in heavy- and medium-duty truck sales.

Leasing company purchases are higher now “because of what happened over the last three years, when we didn’t purchase much, as customers delayed on new leases and ran older equipment sometimes two years longer,” said Bill Hicks, executive vice president of Salem NationaLease in North Carolina.

Hicks, a former chairman of NationaLease, a franchise operation for truck leasing, estimated that 90% to 95% of truck purchases by leasing companies are replacements of older trucks, rather than expansion.

“In some cases, you’d see fleets contract by 25% to 30%, so beyond replacement, they’re just adding back to where they were before,” Hicks said.

Registrations of new U.S. Class 8 vehicles with state motor vehicle administrations have grown steadily since hitting bottom in 2009, Polk said, but older trucks were scrapped or exported more quickly than new units came online, meaning the total number of vehicles in operation has been contracting mostly since late 2009.

The only other increase in the Class 8 fleet was a minuscule 0.06% at the end of 2010. Vehicles in operation peaked at 3.65 million tractors and trucks at the end of 2008 and fell to a low of 3.49 million vehicles in the third quarter of 2011.

The Polk report said lease/rental companies are major drivers in the increased purchase and registration of new trucks. Among all new 129,755 Classes 3-8 trucks registered in the first quarter, lease/rental firms accounted for 21% of the vehicles, more than any other category. Individuals placed second at 19.7%, and general freight haulers were third at 19.7%.

Lease/rental companies placed first or second in each of the six weight classes from 3 through 8, including 25.7% in Class 8, second place behind general freight with 29.4%.

Business executives were pleased to hear of the growth in registrations but expressed concern over the durability of the expansion, given some recent economic news. While the truck sales that precede registrations have been improving steadily, there is rising concern among truck dealers about the durability of that trend, said the chairman of an industry group.

“Truck tonnage is not increasing as in previous recoveries. This appears to be a moderating economy,” said Richard Witcher of American Truck Dealers, a Walpole, Mass., dealer.

“Orders for new trucks are decreasing, and I hear from dealers who are concerned about where the economy is going and over the future of truck sales,” Witcher said (see tonnage story, p. 1).

The Polk report said Class 8 was “the strength of the commercial vehicle market during the first quarter,” surging 44.9% over the first three months of 2011. Based on the first-quarter performance, Polk estimated new U.S. heavy-duty registrations will rise to 190,100 this year from 161,200 last year and 115,000 in 2010.

As for used-truck transactions, Polk said they are declining from the high levels of 2010 and 2011. Registration changes for U.S. heavy-duty vehicles fell 27.6% from last year’s first quarter to 65,332 units, also less than the first quarter of 2010.

“I tell bankers that leasing companies manufacture used trucks. It’s a critical part of our business,” said Thomas Bylenga, president of Star Truck Rentals in Grand Rapids, Mich. “The deep inventory of low-mileage used trucks is not there anymore.”

“In 2010 and ’11, there was a real disparity between the price of a new truck and a used truck that you could operate quite reasonably,” said ATD’s Witcher. “The availability of low-mileage trucks has dried up,” he said.

Gary Meteer, Polk’s director of aftermarket and commercial vehicle solutions, said the decline in used-truck registrations probably is due to a decline in availability of equipment rather than a change in buyer tastes.

Bylenga, Hicks and Witcher all said they are concerned about the economy. They mentioned the likelihood of recession in Europe, political uncertainly here and large tax and budget changes at the end of the year as problems cited by customers that make planning more difficult than usual.