Is It Full Speed Ahead for Commercial Truck Sales?
Recent slow truck purchases could mean the fast lane for sales is just ahead.
While the economic recovery has been afoot for at least the past two quarters, the trucking industry didn't experience the explosive growth we thought would occur in 2010, as the industry began to replace its aging fleet. U.S. Class-8 truck sales totaled 110,000 units in 2010, up roughly 10% from 2009's multidecade low. Given the meager truck purchase levels during the past few years, we will explore what the future should hold for truck sales.
Trucking is highly exposed to the ups and downs of the economic cycle, and these cycles transfer to truck builders. Changes in environmental regulations introduce additional waves in the new truck demand curve. Two sizable industries, automobile manufacturing and home building, pull strongly on demand for freight hauling. These two markets expanded tremendously from 2001 to 2006, only to come crashing down during the past couple of years. U.S. housing starts averaged 1.8 million per annum during 2001-2006, up nearly 20% from its historical average of 1.5 million from 1959 through 2000, according to the Census Bureau. The Bureau of Economic Analysis reports that U.S. light vehicle sales averaged 16.8 million units annually from 2001-2006, up nearly 20% from the 14.1 million annual units averaged 1976 through 2000.
Basili Alukos does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.