Study Says Rise in New Heavy-Duty Sales Would Lead to Surge in Used-Truck Supply

Posted in: Business Factoring News, Freight Factoring News, Staffing Company Finance News, Staffing Faqctoring News, Trucking Finance News- Aug 08, 2013 No Comments

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Aug. 5 print edition of Transport Topics.

A long-anticipated rise in new heavy-duty truck sales could take hold starting next year, and if it does, the vehicles fleets trade in will create a surge in U.S. and Canadian used trucks, but at lower prices, according to a new Frost & Sullivan study.

The consulting firm’s work on equipment cycles said new and used truck sales often move in opposite directions, but for the next two years, sales of both types of vehicles will grow. The basic premise of the prediction is that North American economic growth will accelerate, generating more freight on top of the current record tonnage levels, and finally convince fleets to buy more new trucks.

“The average truck is 6.8 years old and has almost 1 million miles on it. These trucks will fail, and downtime is one of the things fleets hate most, so this is long overdue, and it has to happen,” said Sandeep Kar, the research director for the study.

The report predicts that from 2012 to 2019, sales of new Class 8 trucks will grow by 4.5% a year, on average, and for used trucks the rate of increase will be 2.8%. The sales path for new U.S. and Canadian trucks starts with a dip this year from last year — 241,200 to 235,800 — but then shoots up to 298,200 next year and to 325,400 in 2015.

Used truck sales are forecast to follow a similar pattern, dipping this year to 186,100 units from 2012 and then shooting up to 211,400 next year and 225,600 units in 2015.

The truck buying flows directly from continuing economic growth, including U.S. industrial production, which Frost & Sullivan said will go steadily upward at least until 2016. The prediction is consistent with a Bloomberg News survey of 79 large banks and investment banks, which said real gross domestic product growth will only be 1.8% this year but should accelerate to 2.7% next year and 3% in 2015.

ACT Research Co. also forecasts growth in the U.S. and Canadian truck market, but much less than does Frost & Sullivan. ACT anticipates truck production of 264,500 Class 8s next year and 243,900 in 2015, said ACT Vice President Steve Tam, suggesting activity well below the F&S boom level.

Source:Transport Topics