The research and forecasting company, DRI-WEFA, has reported its latest review and outlook for the US freight truck market.
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A long and winding recovery is predicted with the picture only beginning to show improvement in the second half of 2002. Recovery strengthens in 2003.
DRI-WEFA says that 2001 proved to be a very bumpy ride indeed for the commercial truck business. The slowdown began in 2000, but truck makers felt the worst of it in 2001. US truck production over 6 tonnes GVW (Gross Vehicle Weight) fell by around 33% in 2001.
As for the outlook, DRI-WEFA maintains that there will be no quick turnaround in domestic demand for commercial vehicles. Inventory of new trucks is not in balance and oversupply of used trucks will depress the new truck market in the first part of 2002. The US economy will also be limping along during the early part of 2002, and truck sales are expected to lag the general economic recovery.
It is pointed out that among for-hire and private carriers excess capacity remains the rule rather than the exception, traffic volumes are still depressed and profit margins remain under pressure. In this environment, low interest rates and attractive deals on new equipment will not be enough to jump-start a recovery. In addition, the glut of good condition, used equipment is still depressing new truck sales at the upper end of the market.
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By GlobalData
A turnaround is expected during the second half of 2002, as the US economy rights itself. US retail sales of GVW 3-8 trucks, however, will probably be slightly lower than 2001 levels, says the company. Nevertheless, the second half of 2002 will ‘set the stage for a robust recovery in demand and healthy medium and heavy truck sales for 2003 and 2004.’
DRI-WEFA anticipates strong gains in US manufacturing in 2003-2004 and says that ‘manufacturing is the straw that stirs the drink when it comes to motor carrier traffic.’
In addition, a revival in activity among wholesalers and retailers, small businesses, and the service sector will provide additional support. Domestic construction will probably be the last of the truck markets to rebound; but by 2004, both the residential and nonresidential segments will have turned the corner.
DRI-WEFA says that interest rates and energy prices are expected to rise as the economic picture brightens, but will not reach a point where they become burdensome. Replacement demand will rule the roost during the initial stages of the recovery; but as the recovery in truck demand progresses, fleet expansion will lead the way.
