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Market Down But Showing Improvement, Say Suppliers

DALLAS, TX - While truck and trailer sales are still way, way down from last year’s historic levels, OEMs and suppliers are seeing signs of improvement, most notably in terms of pricing inquiries from fleets.

“Quoting activity is up, and that indicates we’re starting to reach a tipping point about buying trucks equipped with ’07 engines,” David McKenna, product-marketing manager for engines, transmissions and axles at Mack Trucks, told Fleet Owner.

“Slowly but surely we’re getting ’07 product out there,” he added. “While older product is significantly less expensive, at the end of the day, you’re going to pay more in maintenance to keep older product running. So as experience with the new technology increases, confidence will rise and sales will follow.”

Bob Christensen, Kenworth Truck Co.’s gm, said his company is now experiencing that up-shift in confidence with its new T-660 tractor, designed from the ground up around ’07 engine needs.

“It represents 40% of our quote activity and 30% of our [Class 8] orders, whereas its predecessor commanded just 20%,” he noted. “So we think we have a hit on our hands.”

Still, a sluggish economy, slumping freight volumes and the higher price tag for ’07-compliant trucks will depress Class 8 sales for the rest of the year, said Bill Jackson, gm for Peterbilt Motors Co. Peterbilt is forecasting total Class 8 sales of 185,000 for the year, a steep drop from sales of 325,000 units in 2006.

Yet Jackson believes the Class 8 market will grow. “Though tonnage continues to be volatile, we have a bullish outlook now,” he notes. “That’s partly because the next emission cycle is in 2010 so we’ll see another ramp up in sales, and also simply because the overall population of Class 8 trucks keeps growing. In the 1980s, Class 8 sales averaged 125,000 a year. By the 1990s, that had increased to 200,000. So far in this decade, the average annual sales volume is 250,000.”

And though Class 8 sales may have bottomed out in North America, other trucking segments - both in the U.S. and overseas - are showing robust growth, said Gary Gerstenslager, president and COO of Hendrickson, a truck and trailer component supplier.

“One bright area in the U.S. is demand for military vehicles,” he said. “There’s also a pre-buy occurring in Mexico, where they are adopting 2002-era U.S. emission standards, and in Australia, which is moving to Euro V emission standards. China and India’s truck markets remain strong and European sales are strong - to the point where we are shipping product from Canada to Europe to meet demand.”

However, Gerstenslager noted that trailer sales are down and should drop slightly lower next year as well, due to weak carrier profits, an overall slow economy, slower freight and higher fuel costs. Trailer sales in the U.S. should reach 240,000 units this year, then drop to 235,000 in 2008, he said.

The meltdown in the housing market is hurting trucking the most at this point, Gerstenslager added, as that market represents 20% of overall freight demand.

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