THE National Truck Equipment Association believes that trucks will always be needed to carry goods around the nation, take utility workers to downed power lines, and haul tons of old asphalt away from road construction sites.
In other words, it believes the undeniable truth is that trucks will always be an integral part of the economy, regardless of an economic downturn or the kind of cataclysmic event that the September 11 terrorist attacks represented.
In looking at the data and the trends at the end of 2001, Stephen Latin-Kasper, the NTEA's market data and research director, projects that when the first-quarter figures are released in April, the business production index will show that the downward portion of the cycle has troughed, and growth will be steady in the third and fourth quarters. He expects a 7-8% increase in truck equipment sales for this year over last year.
In the fourth quarter, the most dramatic rise in truck sales came in Class 3, with a 25.1% increase after a 20.9% decline in the third quarter. Close behind were Class 2 (28.2% increase after 0.3% decline) and Class 6 (12.5% increase after 12.4% decline). Class 4 showed modest growth of 1.2% to 2.0%. Class 7 and 8 were down 22.3% and 20.1%, respectively, while Class 5 was down 14.6%.
“You could see things starting to change in the fourth quarter,” Latin-Kasper said.
Class 3 sales increased by 50% in January, followed by a 71% increase in February, according to data from Ward's. In Class 2, after a 3.3% decrease in January, there was a 6.8% increase in February.
Cumulatively, only Class 2 and 4 were up in 2001 over 2000. Class 2 went from 2,421,451 to 2,535,691 and Class 4 went from 47,417 to 48,733. The biggest decline was experienced in Class 8, which went from 211,507 to 139,576, a 34% drop. The other numbers: Class 3, from 116,312 to 104,803; Class 5, from 29,125 to 24,362; Class 6, from 51,209 to 42,434; and Class 7, from 122,614 to 95,590.
Decline in Shipments
Latin-Kasper said commercial truck shipments were down 3.6% in 2001 ($62.9 billion, compared to $65.3 billion), while truck equipment shipments suffered greater, falling 19.5% (from $28.6 billion to $23 billion), with the biggest declines being felt in Classes 3 through 8.
He said the NTEA Shipments Index is closely paralleling the Federal Reserve Production Index. Both peaked early in 2000 and fell until the last quarter of 2001, and are now showing upward movement.
Latin-Kasper said declines in the Producer Price Index for trucks, truck tractors, and truck chassis (4.2%), completed vehicles produced on purchased chassis (1.2%), and truck trailers and chassis 10,000 lb per axle and over (1.2%) could be tolerated because of declines in hardwood plywood (1.9%) and steel (16.1%). However, he warned of “substantial increases” in steel prices for the second quarter of this year.
He said the most encouraging sign is that the cycle of the prime rate of interest shows that “it is reasonable to expect a rather sharp increase in truck production in the near future. Every time the prime rate of interest has fallen, truck production has increased sharply. That relationship is very strong. Now, it's not guaranteed. But it's hard to believe, given the decline in interest rates and past history, that we won't see a sharp increase in truck production.”