Economists bullish on ’05 truck sales

NORTH HOLLYWOOD, Calif. (Oct. 14, 2004) — A summer slowdown in new truck sales was largely seasonal, not a signal the industry is moving into another down cycle, economic analysts say.

Heavy Duty Trucking magazine in the U.S. quotes investment firm Bear Stearns’ analyst Peter Nesvold as saying that demand would get a second wind this fall. The upswing came a little earlier in fact, with August sales ahead 15 per cent over the month before, and 94 per cent over the same period in 2003, despite that month being traditionally the weakest in the year.

One explanation, he said, is a modest economic recovery following a soft summer patch, or perhaps fleets are implementing 2005 budgets a little earlier.

Despite OEM assurances that customers will have more time for testing EPA-mandated ’07 engines, Nesvold expects a wave of pre-buying to begin in the next couple months. While tax incentives being lobbied for will help, such plans likely won’t offset higher costs of the engines.

However, expanding economies in the U.S. and Canada along with higher carrier profitability should mean continued growth in truck and trailer demand well into 2005 above and beyond any pre-buying scenario, says Economic Planning Associates. Low interest rates, moderate inflation would help facilitate investment decisions.

The group predicts 227,000 retail class 8 and bus sales in 2005; 86,000 class 7; and 78,000 class 6.

— from Heavy Duty Trucking