THE commercial vehicle population is getting younger.
According to statistics compiled by RL Polk, 53.6% of the Class 3-8 vehicles in operation in 2010 are from the 2000 model year or newer — an increase of 4% in one year.
“They are not selling a lot of new trucks, but used trucks have become a high-demand item in the marketplace,” said Gary Meteer, Polk's Director of Sales & Client Services. “About 9% of the vehicle population is in fact 1985 or older, and 37% are from 1986-99. This tells you if you're doing things with components or with vehicles that are very years/miles-specific, then you probably want to pay attention to the age of the vehicle population.”
He said there were 11.7 million Class 3-8 vehicles registered with the Department of Motor Vehicles to operate on United States highway in 2010. There are 3.3 million in Class 3 and 3.5 million in Class 8. Even though all other GVWs are small, there are still over a million vehicles in every class but Class 5 that are registered by some company to do business, according to Meteer.
Ford has the most vehicles running on US highways (3.2 million), most of them in Class 3-5. International has 1.5 million, primarily in Class 8, but the brand also is strong in Class 7 because of its school bus chassis. Chevrolet (1.3 million) and Freightliner (1.29) follow closely behind.
Meteer said 1,039,000 vehicles changed hands during the 2010 calendar year, including 672,000 used vehicles. In 2006, new-vehicle registrations accounted for 61.7% of the total, and now that's just 35.3%.
Explaining the fact that the Class 8 portion of used registrations has grown from 42.2% to 47.6% in the past two years, he said: “They are heavily in demand for large fleets pulling trailers. They run a lease for three to five years, then when that truck comes off the lease, fleet companies are replacing it with a new piece of equipment and an old piece goes into the aftermarket. You've got owner-operators buying them and a lot of people looking at them as a good piece of clean equipment. There's not so much demand in other segments.”
Fifty-one percent of the Class 3-8 vehicles are being operated by fleets of one to five vehicles, 32% by medium-sized fleets (six to 499), and 17% by large fleets (500-plus).
In his “Commercial Vehicle Market Overview,” Meteer said Polk's data is sourced by purchasing all registration records from each state DMV and all Canadian provinces, along with major global markets. VIN specifications are provided by OEMs (for North American markets only), data flows continuously, with name, address, and VIN checked for accuracy and consistent reporting.
He said there are two ways to look at a vehicle: how it's registered, and how the manufacturer goes to market defining that vehicle. He said Polk records its analyses based on how the vehicle is actually used.
Here's how he broke down the market:
- Class 3-8, 1985-2010.
“The peak was in 2006, when the industry was booming, topping out at 800,000. Unfortunately, it hit 327,000, which is a 60% decline, peak to trough. We've now seen a rebound in 2010; business was 367,000. That's up 12% from the trough in 2009, which was the lowest number of registrations in the commercial vehicle sector since we started keeping track of records.”
- Class 3-8 manufacturer history.
Almost 30% of all new commercial vehicle registrations have the Ford Motor Company brand, which dominates the Class 3-4-5 sectors. Then come Freightliner at 12.9% and International at 11%.”
- Class 3-8 history in units.
“For the 19-year average, about 33% of all new commercial vehicle registrations were Class 8 vehicles. About 26% were in Class 3. In 2010, Class 3s were up 25%. The increase year-over-year in business between 2010 and 2009 was driven by Class 3 vehicles. They account for a 30% share of market. That's really important. Everybody pays attention to Class 8 because they view it as the bell cow in the industry. Class 8 registrations year-over-year were up less than the industry average.
“As we see the diversity of product offerings from Ford, GM, Dodge, and even International as they have gone deeper into the GVWs, you can see how Class 3 has grown. It has significantly surpassed Class 8 in 2010 as the No. 1 GVW vehicle type in the industry.”
- Class 3 and Class 8, 1991-2010.
“Beginning in 2000, Class 3 began to pick up. That's when we saw heavy pickups come into the market. Detroit manufacturers started to introduce heavy trucks in 2003 and that started the trend of Class 3 growing.”
- Class 3 manufacturer history.
“There are a lot of players: Chevrolet, Dodge, Ford, GMC, Isuzu, Mitsubishi. Ford is predominant. If you look at the penetration of Class 3 vehicles, in 2005 Ford topped out at 57%. In the 1991-2009 time frame, Ford averaged about 40%. In 2010, it accounted for 52% of all product sold in this segment.”
- Class 3 body type history.
“If you go all the way back to 1991, you had motor home chassis and chassis cabs and a number of different types of vehicles. In 1999, 2000, and 2001, there was the introduction of vehicles like Ford Super Duty. That's when the whole structure of the Class 3 market started to change. Right now, 60% of all vehicles registered in Class 3 are pickup trucks. You can go back to lean part of the 1990s, and that sector wasn't even there in this GVW.”
- Class 8, 1991-2010.
“You go back and look at what was going on in the ‘90s — it was 40% of the business. That's where the volume was. The percent of business has come down. In 2010, it peaked at just over 30% of the market.
“Typically when people talk about Class 8 trucks, they look at the top six. In our data, we have an ‘others’ category, because there are large companies like Spartan, IC Corp, and Blue Bird. Those are all vehicles registered that use Class 8 frames and components. Right now, 85% of business is accounted for by the top six; 15% is ‘others.’ Freightliner is the No. 1 brand in Class 8, followed by International. That's a switch that has taken place recently.”
- Class 3-8 by region.
“Our information has name and address. We can break it down and look at a geographical analysis based on what information is most important to our customers. We show four geographical regions. The South is far and away tops in unit volume.
“If we look at penetration, we find that 30% of business is transacted in the South. A lot is influenced by the geographical cities. Some of it is influenced by dealer groups strong in certain geographical areas as well as fleets that do buying in certain geographical areas. We know who those fleets are, so if you say, ‘Well, I don't do business with big fleets, so how does this market look without big fleets?’ … We can tell you. We can tell you what Atlanta would be like without Coca-Cola. You can benchmark yourself against a more reasonable level of activity.”
- Class 3-8 region history.
“For 2006 to 2010, how did each GVW do? All regions are skewed toward Class 3, because it makes up 60% of business, so that will influence every region. The Northeast has more Class 7 trucks than any other region. You say, ‘What's going on there that drives Class 7? Why in the Central region does Class 8 bounce over 40% and stay hovering there? And why is Class 3 doing so well out West?’ If you are a supplier and are putting parts on Class 3 trucks and you're not doing well on the West Coast, you have to ask yourself, ‘What's going on?’ If you're not participating in that activity, we can tell you why and who is doing it.
“The New York Times or Wall Street Journal will say that business is up 12% this month. They never tell you the annual rate. There are orders for Class 8 trucks that are 200% higher than a year ago. OK, they don't tell you when that order is or where it's going or who it's for or what's happening, so you sit there in your office and think business is booming. You call in the sales guy and say, ‘Why aren't we moving?’ Well, you have to peel back the data and look at it in detail.”
- Class 3-8 vocation history
“How do people use the vehicles they buy? We looked at 34 different vocations. That's a lot of diversity of product and use within the marketplace. If you look at this piece of information, about 40% of Class 3-8 new registrations in 2010 were either to an individual, which means that he registered under a name, or to leasing companies like Ryder, Penske, Enterprise, and Budget.
“Almost half of Class 3 vehicles are registered to John L Doe not John L Doe, LLC. They're transitional vehicles used by gentlemen or ladies for business during the week. For whatever reason, they elected to register in their personal name. Class 3, 6, and 8 are above the industry average in leasing. What do you see on a Penske or Ryder lot? You see chassis cabs with 10-foot boxes and cargo vans. You don't see many Class 8, but that's what they're renting and leasing to fleets.”
- Class 5 vocations.
“The smallest group of vehicles. It's very, very specific vehicle types that have a lot of applications across the industry. For Class 5 vehicles, over 20% are consistently used in smaller applications.”
- Class 6 vocations.
“They are well above the industry average. They are the leasing vehicle. You get into trucks used for horse trailers and some very, very specialized industries.”
- Class 7 vocations.
“A very interesting segment from Polk's perspective. You don't see a lot of conversation about Class 7. But it's about 80% of all vehicles in the transportation and bus transportation sectors. This is where the Blue Birds, Spartans, and all of the school buses get registered. These are manufacturers who never report that information to the public domain. Because school buses are there, you see it creep up in June, creep more in July, and then it hits its peak in August, because that's when you have to deliver all the school buses to school to start picking up kids. If you're in the school-bus business, you want to know what's going on in Class 7 if you're trying to do parts or put applications in there for school buses.”
- Class 3-8 industry versus % change in GDP, 1991-2010.
“It's one everybody hears about and everybody's tracking. When the GDP changed in 2009, nobody was buying goods, so there was not a need for vehicles to transport them. People weren't moving, so rental companies were not buying Class 6 trucks. We use a lot of indicators that correlate what's going on historically and what's happening in the future.”
- Class 3-8 outlook, 2010-2015.
“We believe business for commercial vehicles in total for 2011 will be approximately 410,415 units, another 13% increase over the 2010 calendar year. Which means that trough to upside, from 2009 to 2011, we had a 25% increase. We believe, based on current economics, that demand for commercial vehicles by 2015 will be approximately be 720,000 units. That's 10% lower than the peak of 800,000 we saw in 2006. But we believe north of 700,000 is a reasonable outlook for the 2015 calendar year. But it's a moving target. 2010 came in about 7000 higher than our models showed a year ago. We thought 260,000 and it came in 267,000. We didn't anticipate Class 3s would have such significant growth, starting in June.”