NEW YORK -- There are fewer optimists
left who believe class 8 sales will pick up significantly anytime soon,
notes the transportation research arm of Wall Street market analysts
In a conference call titled "Turn Signals: What's the Outlook for
Commercial Vehicle Demand in 08-09?" experts suggest the current
downturn is attributed to the ongoing freight recession.
Looking forward, the mood in the industry remains overly cautious.
There's a series of other regulations beyond emission
rules that's expected to drive up the price of a new truck.
Stearns admits it's had to tone down its own expectations that another
"pre-buy" cycle in advance of the 2010 engine emissions regulations
would significantly boost sales over the next two years. That likely
isn't the case, as fleets would rather trim capacity than significantly
invest in '08 or '09 trucks.
However, the firm says there are some other dynamics here. "Freight's
already been bad for a year or more, so our sense is that we are
incrementally closer a rebound," it states.
Furthermore, lowered forecasts imply two years of production at or
below replacement demand in both '07 and '08. "While this did occur
during the '01-'03 downturn, bad freight fundamentals at the time were
further exacerbated by an implosion in used truck prices."
Meanwhile, normal trade cycles will likely put upward pressure on
replacement demand for the next 3 years. The only thing that seems
certain about 2010, says Bear Stearns, is that prices are going up.
Beyond emission regulations, there will be other factors at play over
the next few years, including NHTSA braking regulations; on-board
diagnostics; electronic on-board recorders; and electronic stability
control. "It's likely that these regulations will also drive higher
purchase and/or operating costs, which is a dynamic the industry has
not previously dealt with at the same time as an emissions change." Courtesy of Today's Trucking