Class 8 Update: Downturn, But Far From Bad Times
Production cutbacks should reduce heavy truck inventories, but are fleets waiting for new, more fuel-efficient models to appear?
">Production cutbacks should reduce heavy truck inventories, but are fleets waiting for new, more fuel-efficient models to appear?
">Class 8 truck orders have fallen and the truck builders have cut back production, but these are far from bad times for the truck-building industry, and manufacturers say 2016 North American sales should finish up at a respectable 220,000 to 240,000.
“The truck market reflects the good economy and high freight tonnage levels,” says Gary Moore, executive vice president at Paccar, parent of Kenworth and Peterbilt.
John Walsh, vice president, global marketing and brand management at Mack, further explains, “Highway business is off, but construction remains strong, and that's our silver lining, because Mack has always been strong in construction trucks — that and refuse.”
All economic indicators look positive, according to the National Association for Business Economics, whose members predict the gross domestic product will grow 1.5% this year and 2.3% next year. They don't see a downturn until 2018.
Marketers at the truck manufacturers agree: “We still see positive trends in housing construction, automotive sales and in the economy in general for 2017,” says Anthony Gansle, on-highway product manager for Peterbilt. “Next year should also benefit from getting past the election cycle. We would expect the industry to see around the current replacement rate.”
So what's causing the current downturn? Fleet hunger for road-going equipment, to replace worn-out iron run through the Great Recession and beyond, was satiated. But truck builders did not cut back production as soon as they should have.
“Truck inventory is high,” says Walsh. “We were slow to adjust. We had some earlier layoffs, and we're taking down weeks now, one week a month when we're shutting down, through December.”
Steve Gilligan, vice president, product marketing at Navistar International, had another read on the falling orders situation. “In summer the market normally dips,” which ...Read the rest of this story
