Commercial truckmakers are on a pace to smash last year's strong U.S. sales total for Class 8 vehicles, despite parts bottlenecks and a chronic shortage of drivers that is limiting fleet purchases of new vehicles.
At midyear, U.S. sales of Class 8 trucks totaled 127,568 units, up 29.5 percent from the first half of 1998. Last year truckmakers sold 209,482 Class 8 heavy trucks in the United States, the best year in at least three decades for the volume-leading segment of the commercial truck industry.
The tremendous demand for commercial trucks, boosting sales this year across all vehicle weight segments, has been driven by a strong U.S. economy and the expansion of trucking fleets. Still, the growth rate in sales has fooled many truckmakers accustomed to the traditional boom-and-bust cycle of the industry.
TOO GOOD TO BE TRUE?
Chris Patterson, executive vice president of sales and marketing for Volvo Trucks North America Inc., admits to some nervousness about a market that just doesn't seem to show any signs of a slowdown. 'It's kind of like Cindy Crawford asking you for a date,' he said. 'You're thinking, this can't be happening.'
Forecasts are being revised. Early this year, Navistar International Corp. bumped its forecast for U.S. and Canadian Class 6-8 sales up 30,000 units to 415,000 trucks. The rate of new truck orders has slowed in recent weeks, but Navistar's backlog remains firm, said Stephen Koch, vice president of sales and distribution for Navistar's truck group. While he expects demand to soften next year, Koch said that the market now is a 'great' one.
'Nobody ever dreamed that we'd be operating at the levels we are today,' he said.
Nobody, including suppliers. With total medium- and heavy-duty truck sales up 29 percent to 259,221 units at midyear, the supply base has been pushed beyond its limits in some areas. In June, a part shortage forced Volvo to park unfinished trucks in a field for days until the supplier, whom Patterson would not identify, could start catching up. That depressed Volvo's June sales numbers and had customers, expecting delivery of new trucks, 'ripping' into Patterson.
'It was ugly, I can tell you,' he said.
In June, Navistar announced that an ongoing shortage of automatic transmissions from General Motors' Allison Division was forcing it to cut back production of trucks, triggering a layoff at its Springfield, Ohio, assembly plant. Koch also is worried that any further increase in truck demand would cause disruptions in the supply of truck axles from Meritor Automotive Inc., which is operating at capacity, he said.
PACCAR Inc. has boosted Class 6-8 truck production by 65 percent during the past two years and is looking at another near-term increase for certain Kenworth and Peterbilt products, the company announced last week.
Although the truckmaker has seen 'sporadic' supply bottlenecks, it has managed to work around these and avoid production shutdowns, PACCAR Vice Presi-dent G. Glen Morie said.
DEARTH OF DRIVERS
Outside of parts shortages, another limiting factor is a lack of drivers, which restricts the ability of fleets to expand. Both Koch and Patterson said sales might be even stronger this year if enough drivers could be found to handle all the new business inquiries coming to trucking companies.
American Isuzu Motors Inc. is showing a 52 percent increase in Class 4-7 sales through the first six months of 1999 on the strength of growing acceptance of cab-over vehicles to delivery companies and other service firms.
New-product introductions and upgrades of existing vehicles also have helped boost sales, said Todd Bloom, vice president of commercial vehicle business development and marketing.
'The market is up tremendously,' he said. 'All the service industries remain exceptionally strong.'
Like others, Bloom said he is a little gun-shy when it comes to predicting how long the boom will last. But he is convinced the truck market is going through a fundamental change that will result in fewer of the peaks and valleys than have been the case in the past.