While Mack Trucks expects total Class 8 production volume will reach 215,000 units for 2017 – mirroring projections by other industry analysts – the OEM also believes that “underlying demand” for heavy trucks is stronger than many think, meaning that the market should exit 2017 stronger than when it entered the year, with manufacturers ramping up to build more equipment as time goes on.
“We’ve come out of a long correction in the long-haul sleeper and daycab segments, while vocational sales continued to do well. That played to Mack’s strengths so we had a good first quarter this year.”
High inventory levels were one reason for that “correction,” he said, with virtually all of it comprised of on-highway Class 8 trucks.
But inventory peaked in October 2015 and has now been reduced to what Slagle called “a healthy level” and that OEMs have now positioned their factories to build to customer demand.
“We’re looking at some sort of ramp [up] to adjust to market conditions,” he emphasized. “Underlying demand is healthier than last year. We also think the business-friendly environment of the Trump administration will help if he gets through the mismanagement of the [federal] bureaucracy and gets back on track to focusing on the economy.”
Jonathan Randall, Mack’s senior vice president of sales, added that Mack grew its market share in every one of its segments last year – on-highway, regional, vocational, etc. – for a total gain of about one percentage point, which, “by all accounts is putting Mack on a roll.”
He noted that the OEM plans to expand on its “growing foothold” in the long-haul market with a product announcement slated for later this year, alongside plans to keep growing its regional business while maintaining its position in the vocational segment.
“We see the same [growth] trends we experienced last year occurring this year,” Randall pointed out.
Part of that growth trend includes faster adoption of Mack’s proprietary mDrive automated mechanical transmission (AMT), stressed Roy Horton, Mack’s director of product strategy.
He said the mDrive is being spec’d in 80% of the OEM’s Pinnacle axle back highway models, 60% of its Pinnacle axle forward models, and 20% of its Granite conventional trucks – with Randall noting that the backlog for mDrive gearboxes spec’d in Granite vocational models is now at 30% for 2017.
Overall, Horton said AMTs and fully-automatic transmissions are now being spec’d across 80% or more of all Mack’s models, with only 15% to 20% of orders requesting manual transmissions.
“We sell more Eaton manual transmissions on the highway side of our business, while our proprietary Maxitorque [manual] is the predominate selection on the vocational side,” he added.
Other trends Mack touched on during its Charleston conference included:
- Slagle believes demand for trucks that run on liquid natural gas or LNG “is dying” while demand for compressed natural gas or CNG-powered trucks “is staying pretty steady.”
- While that is promising, he added that diesel remains a “foundational fuel” as it is powerful, clean, and fuels 3.5 million vehicles in the U.S. served by 60,000 filling stations across the country. “Diesel is going to be with us for a while,” he stressed.
- Horton noted that demand for engine displacements greater than 13 liters is declining rapidly across the Class 8 segment. In 2009, he said, 56% of Class 8 trucks had engines with displacements greater than 13 liters; by 2016 that dropped to 40%.
- John Walsh, Mack’s vice president of global marketing and brand management, noted that the difficulty of finding drivers remains an “underlying theme” among the OEMs customers. “The hard part is putting into numbers just how many more trucks the industry would sell if it had enough drivers,” he said.
- Randall noted that OEMs remain supportive of Phase 2 greenhouse gas (GHG) rules and that Mack will not change its GHG-based product plans going forward. “They will help us meet customer demand for more fuel economy,” he explained.
- However, Slagle stressed that it remains “very challenging” to get Class 8 trucks to meet the GHG standards. “Make no mistake, this is costing a lot of money and the end user must embrace that as well,” he pointed out.
- David Pardue, Mack’s vice president for connected vehicles and uptime services, said more than 55,000 Mack trucks are now on the road equipped with the OEM’s GuardDog Connect telematics system. Even legacy models can now be upgraded with a similar telematics function via its new partnership with Geotab.
- Pardue added that 91 dealers now certified as “uptime centers.” At those locations, repair diagnostic times are down an average of 70%, repair times in total are down 21%, shop efficiency is up 24% and “check in” time for repairs is down by over 40 minutes.