This is in regards to the article “Volvo Group deliveries down 60%,” Oct. 2007.
It’s a fact that all manufacturers are down substantially in truck deliveries but it’s high time we identify the reasons why this is occurring. For quite some time now we have heard nothing but misinformation about new engines, pre-buys and the “soaring costs of new trucks” as a result of new fuel and new engine technology. The writer of this article refers to “customers shying away from the more costly 2007 trucks and engines.”
First of all, trucks are not more costly. In fact, as a direct result of the downturn in new truck deliveries, manufacturers have implemented unprecedented discount structures that have resulted in the best and lowest truck pricing in many years, even without the impact of a robust Canadian dollar.
Secondly, there never has been a pre-buy. What we experienced in new truck sales over the past several years was as a result of a very healthy appetite for new trucks brought on by a very healthy US and Canadian economy.
While there is some reluctance on the part of truck buyers to switch to the new technology, the impact this has had on the decline in new truck deliveries pales in comparison to the impact a strong dollar has had on southbound freight.
We have lost over 50,000 manufacturing jobs in Southern Ontario this year alone. In addition to this, the US economy is in terrible condition because of the sub-prime lending fiasco which has brought the housing market to its knees. Also, with the increasing driver shortage, buying new trucks makes little sense if they are to sit idle waiting for someone to fill the seat.
Costly new engine technology and pre-buy – no way! It’s time we stated the facts and started embracing a new, clean technology that is here to stay. As you know, we will be doing this all over again in 2010 so hopefully we all will be better informed as to the impact the newer technology will have on truck pricing and avoid the fear-mongering that took place the last time. Thanks for taking the time to read this. Obviously if I was busy selling trucks I wouldn’t have had time to drop you a line or two. I enjoy your magazine!
Kenworth Truck Centres
Ed: While you’re correct in stating the slowing US economy and softening freight volumes have impacted truck sales, there’s no denying there was a pre-buy in the months leading up to 2007. Our own research suggested 33% of Canadian fleets were planning to pre-buy equipment in 2006 and 19% planned to delay new truck purchases. The “unprecedented discount structures” and “lowest truck pricing in many years” to which you refer appear to be a silver lining in all of this for truck buyers.
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