Truck market rebounding, OEMs foresee growth in ’03
May 1, 2003
LOUISVILLE, Ky. - Despite a sluggish start to 2003, Kenworth general manager, Bob Christensen, says he's optimistic the market will begin to recover in the second or third quarter.Christensen says tru...
REBOUND?: The big wigs at the major OEMs are predicting sales to bounce back, as consumer confidence in the new low-emission engines increases.
LOUISVILLE, Ky. – Despite a sluggish start to 2003, Kenworth general manager, Bob Christensen, says he’s optimistic the market will begin to recover in the second or third quarter.
Christensen says truck sales should increase as the year progresses, and the company plans to continue expanding its dealer network in the meantime to meet the expected increase in demand.
He made the comments at the Mid-America Trucking Show in Louisville, Ky.
“In the first quarter, we were pretty much right on track, where we thought we’d be,” Christensen says.
He says many fleets currently have an aging truck fleet, with just 40 per cent of the trucks on the road being less than three years old.
“Fleets are faced with the expensive prospect of running older trucks,” he says.
According to a recently-released white paper on life cycle costs, it’s more economical in the long run to replace trucks before they get much older than that, and Kenworth is banking on the assumption that fleets will begin replacing that aging equipment soon.
The company is forecasting about 160,000 Class 8 truck sales in the U.S. and Canada over the course of this year, despite the slow start.
Christensen notes that freight volumes have remained steady throughout the industry downturn, but capacity is decreasing due to consolidations and carrier bankruptcies. Kenworth published the White Paper on Life Cycle Cost in hopes of educating fleet managers and owner/operators about the importance of replacing aging equipment before it begins to have a detrimental effect on a fleet’s efficiency and productivity.
“It’s important to consider the total cost of ownership over the life cycle,” says Christensen. “The white paper offers fleets and owner/operators ways to get the most for their money over the life of their truck.”
The white paper urges truck owners to consider such factors as fuel economy, payload, maintenance and resale value while determining how long to keep a truck on the road before replacing it with a newer model.
Kenworth had what it refers to as ‘the world’s most efficient truck’ on display at the show, to further emphasize the importance of understanding life-cycle costs.
It’s an aerodynamic T600 equipped with a number of options to maximize efficiency, such as wide-based single tires.
Despite the difficulties facing truckmakers over the past year, Christensen says Kenworth is once again ramping up its medium-duty build rate to accommodate increased demand in that market segment.
Freightliner president and chief executive officer, Rainer Schmueckle, is also predicting a strong finish to 2003, with a full-fledged market comeback in 2004.
After trimming more than $500 million from the company’s budget last year, Schmueckle says the company is back on track.
“We are confident today that by the end of the year, we will be calling this turnaround phase completed,” Schmueckle told the trade press at the Mid-America Trucking Show.
Despite the industry downturn, Schmueckle says Freightliner has maintained its fleet business, and it’s now poised to expand its small fleet and owner/operator sales.
“Freightliner will increase its focus on small fleets and owner/operators,” Schmueckle confirms.
“We feel we always had the products to appeal to those markets.”
He says the company will also aggressively pursue the Class 6 and 7 markets.
“Since July 2002, net orders have been increasing steadily,” he says. “We are starting to see some big fleets make some…investments.”
He says fleets and O/Os are becoming more comfortable with the new generation of low-emission engines and are ready to start replacing aging equipment.
“We think the heavy-duty truck market is in for a significant recovery in 2004,” says Schmueckle.
He says the company will also begin preparing for the 2007 line of engines immediately so the industry can avoid the uncertainty that surrounded implementation of the October ’02 engines.
Peterbilt is also confident truck sales will soon pick up.
“Owner/operators are leaving the business because of the market conditions and those coming in are affiliating themselves with fleets. But when the market picks up later this year, and it will, more (O/Os) will start to enter into it again,” says Dan Sobic, assistant general manager for Peterbilt.
“Owner/operators are a resilient group and entrepreneurship is alive and well in North America,” says Panza.
It’ll be the third or fourth quarter before sales begin picking up in earnest, predicts Volvo Trucks’ senior vice-president of sales, Scott Kress.
“There is a continued weakness for the overall economy,” he says. “The first and second quarter have been fairly flat, but all OEMs have a business plan in place for when things pick up in the third and fourth quarter.”
Volvo Trucks is well positioned for the upturn in 2003, says Kress.
“Escalating fuel prices, the challenges of driver shortages and the trials of the EPA engines have tested the industry, but there is a lot of curiosity out there and we are picking up momentum for the recovery,” he says.
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