Demand for Heavy Trucks Declines

A recent survey of North American fleet owners says that the demand and outlook for heavy trucks is weak and weakening.

Conducted by Eli Lustgarten of Longbow Research, an independent institutional equity research firm, over the past three months there has been an increase in those responding that they were unsure about their intentions to purchase equipment this year and a large decrease in the number of those saying “Yes,” they would buy.

In commenting on results, Lustgarten says, “Those uncertain about their plans for buying in 2008-2009 cite rising costs, overall economic conditions, and reduced expectations for next year.”

As to purchasing, results indicate some 50% of those surveyed have no plans to buy for the rest of the year and into early 2009. For comparison, the numbers were 45% in July, 61% in June, and 46% in April. Some 20% now say they plan to make additions to their existing fleet, versus 33% in July, 22% in June, and 25% in April. Uncertainty increases as 30% of respondents have yet to make a buying decision, versus 21% in July, 17% in June, and 29% in April.

Although this recent three month report has responses trending down, Lustgarten feels guarded optimism has returned, likely due in part to moderation in fuel prices. “While the majority of respondents expect a better 2008-early 2009,” he observes, “many believe there will be only a slight recovery in the industry as prices (hopefully) stabilize and the number of carriers versus freight reaches equilibrium.”

Companies covered by Lustgarten likely to be affected by survey include Caterpillar, Cummins, Donaldson, Eaton and Hawk.

“We continue to project a muted pre-buy of about 240,000-260,000 class 8 units for both 2009 and 2010, somewhat below the 280,000 unit industry consensus for next year— falling to about 235,000 units in 2010,” Lustgarten concludes. “Our participation at recent economic outlook conferences suggests to us that the 2009 outlook is being rethought by many industry forecasters.”

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