THE truck market is showing signs of life and is using 2003 as a steppingstone for a healthy rebound next year, Kenneth Kremar said in his “Truck Industry Market Forecast.”
“We're not looking for anything dramatic to happen this year,” said Kremar, a principal in Global Insight's Industry Forecast Practices Group. “The important thing for 2003 is it's a transition year. It's a year when everything gets larger so that 2004 and 2005 can be considerably better.”
Kremar said the top 100 trucking companies operate fleets with about 650,000 trucks and are poised to step up their spending.
“They have enough clout to where they can move this market,” he said. “Once they are convinced that the recovery has legs — and that's really the million-dollar question, ‘Does the recovery have legs?’ — they're going to start bringing their replacement levels back up. Those trucks that were brought on line during the initial stages of the last boom in equipment buying are going to start being replaced.”
Kremar said the nation's economic recovery is gaining traction, and the preconditions for an acceleration in growth seem to be in place: lower interest rates, lower energy prices, better financial market conditions, tax cuts, and a weaker dollar.
He said that although the economy is finally on the recovery track, it will be running on only three of its six cylinders for a while.
Light vehicle sales peaked at 17.4 million in 2000, but he said that after a fall into the 16.3 range, they are nudging back up and are projected to reach 17 million again next year.
“They just keep pumping up the market,” he said. “I remember the days when people thought that 15½ million units was really good business. We've pulled in a lot of new people to the market, and the economic conditions have been such that the trucks have been sold.”
He said medium-duty truck sales peaked at 265,000 in 1999, and after falling to less than 180,000 in 2002 are poised to top 200,000 in 2004 and possibly close in on 250,000 in 2005.
Heavy-duty sales also peaked in 1999 at 265,000, but fell to their low in 2001. Kremar said sales could reach 205,000 in 2004 and 250,000 in 2005.
“We think that with a more broad-based economic recovery that pulls in some of the vocational markets, as well as some of secondary or third-level trucking companies, US sales could be 250,000 by 2005,” he said. “I'll admit those numbers may be somewhat optimistic, but we're optimistic about the way the economy is going. We think there is a fair amount of replacement demand that's sitting out there just waiting for the right set of economic conditions.”