February 23, 2012
Some bright spots stand out for this year and next.
By Denise L. Rondini, Executive Editor
Things are improving in the trucking industry as freight is moving and the economy is slowly coming back. Ryan Carmichael, research analyst in the commercial products program at Frost & Sullivan, says, “On the sales side things are starting to pick up to previous historic levels, but there still is a bit of the replacement rate to be addressed.”
He anticipates new vehicle sales in the 268,000 range for 2012.
One of the bright spots he sees in natural gas powered vehicles. “Sales numbers are starting to pick up there,” he says. The interest in this market segment is being driven by fuel prices. Even with the increased cost of the equipment, the lower price of natural gas over diesel is bringing payback periods to the two and a half year range.
“People have tried to sell these vehicles on their green aspect, but it absolutely is a dollars and cents story today,” Carmichael adds.
Another bright spot is used trucks, says Karen Braddy, general manager for Manheim Specialty. “Sales for desirable, low-mileage units remain strong and buyers are paying more than ever for a quality used unit.”
Safety and emissions are driving activity in the repair sector, according to Kumar Saha, industry analyst with Frost & Sullivan’s Automotive & Transportation practice. “Regulations and requirements in terms of safety and emissions are driving things like brake system repairs, replacement tires and engine part sales.”
He adds, “Obviously the big story is aftertreatment. Diesel particulate filters are getting to the point where they need to be replaced, so there is some uptick there as well.”
Carmichael sees intermodal becoming a bigger story going forward. “It is going to be about getting optimization out a vehicle, so you are going to see fleets getting into smaller locked routes that service off of rail channels.” He says it will be small steps but that it will reduce the demand for long-haul vehicles.
Carmichael believes this will be in part a result of new drivers entering the workforce who will want to be home more frequently.
Additionally as drivers with less skills enter trucking, Saha believes we will see a growing penetration of things like automated and automatic transmissions, as well as diagnostics and prognostics. “It is possible that these drivers will be less tuned in the equipment so fleets will adapt more advanced technology in order to monitor vehicles themselves,” he says.
While sales data for medium- and heavy-duty trucks indicates numbers will be up, Braddy does not expect the normal used truck pattern to occur.
“The increased production of new units would normally lead to a large influx of used units in the marketplace, but there still seems to be a shortage of good used trucks and prices on used units still remain at all time high levels,” she says.
Used vehicles are not the only one with pricing considerations. According to Carmichael, price increases for new vehicles are in the 1 to 3 percent range. “In terms of pricing, material costs have been a concern. But there is talk of China slowing down in terms of its demand for a lot of those materials.” If that occurs, material costs should come down.
Manufacturers seem to be keeping pace with product demand and several truck makers have added capacity at their manufacturing plants to bring back logs down.
As for 2013, Carmichael says the U.S. trucking market may be influenced by outside factors. “It is a global economy, so what happens here is going to depend on what shakes out in Europe and what happens in China.”
However, he expects next year to be a pretty solid year with truck production at 285,000. “Not as marked a rise as we have seen in the past couple of years, but obviously we are starting to get back to rational replacement levels.”
Braddy says she will be watching trends closely and will be interested to see the impact of increased new vehicle production in 2011 and 2012 will have on the volume of used trucks available in 2013.
Aftermarket demand will follow the trucking industry, Saha says. “There will be modest growth; nothing exceptional. In brakes and other safety related parts we will probably see 3 to 4 percent growth, but other parts will be in the 1 to 2 percent range if they are lucky.”