From the category archives: Market Analysis and Forecasts

Market Analysis and Forecasts

Preliminary May Sales Data

With about 85% of our individual dealer sales reports in, it looks like there was a drop in sales volume for May from this segment. We still have yet to hear from a few of our larger-volume dealers, so I’m hesitant to provide an estimate – but look for May to unwind much of the volume gains made in the preceding months.

Other sources were comparable to April in terms of volume, so this phenomenon appears limited to the dealer segment for the time being.

Happily, pricing in general does not appear to have changed appreciably, with retail selling prices looking comparable to April. The newest model years (2008 and newer) may be slowing their appreciation curve as more of these trucks enter the secondary market, but supply is still inadequate to meet demand.

For now, then, this development appears to be limited to volume. Look for final analysis in our July Guidelines, which will be out the second week of the month.

No Gloom & Doom Yet on the Industrial Side

As we predicted, US Industrial Production stayed essentially flat for the second month in a row, rising 0.1% over April. Despite continued impact of the Japan disaster on the auto industry, the manufacturing sector was up 0.4% over April. It appears that vehicle manufacturing had less of an impact in May, as manufacturing was up 0.6% if you exclude auto production. Another trucking-focused piece of the puzzle, consumer goods, was down a negligible 0.1% in May. The minor drop in durable goods for April was basically canceled out in May. Home electronics were up 1.7%, appliances, furniture, and carpeting was up 1.8%, and miscellaneous durables was up 0.7% Bottom line? The growth of the industrial economy has slowed in the past two months, but the data isn’t yet showing much reason for concern. As the auto industry ramps back up in the next few months, look for a more meaningful uptick in the manufacturing sector. And barring any unlikely increase in gas prices, consumers should keep the durables ...

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Truck Manufacturing Still Looking Good

As reported in Transport Topics, the Class 8 manufacturing environment remained strong in May. Orders were down 38% from April, but still ahead of last May by 85%. The industry should be on track to build somewhere around 250K trucks this year, the most since 2006. Manufacturers, dealers, and analysts continue to state that new orders are for replacement of older equipment rather than expansion of fleet size. With the economy now pretty clearly in a slower growth mode, we seem to have made our way through the sweet part of the recovery without adding substantially to the size of the national trucking fleet. On the bright side, the manufacturing backlog essentially takes us to the end of the year if not beyond. As such, barring any unexpected economic disaster that results in order cancellations, jobs and corporate revenues connected to truck manufacturing should be safe at least until then. At the same time, with all relevant measures showing a moderate slowdown in the recovery, it might not be a bad t ...

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Expect Another Drop in Tonnage for May

The Pulse of Commerce Index, a measure that uses sale of diesel as a proxy for freight activity, dropped by 0.9% in May. The PCI is a good “heads up” for what we might expect the ATA’s Truck Tonnage Index, as well as the Fed’s Industrial Production figures, to show when they are released in about two weeks. As stated in the report, economic growth from 2009 to mid-2010 was based mainly on inventory restocking. The trucking economy benefited from this growth, as demand for new and used trucks made clear. Interestingly, the freight environment hasn’t let up much since the economy shifted into a slower growth mode. Orders for new trucks remain at elevated levels, and selling prices for used trucks are still at historic highs. We will get a clearer picture of the industrial sector when the official figures are released next week, but I would bet on continued decrease in manufacturing of autos and durable goods (the former due to continued parts shortages from the Japan disaster, and the latter due to reduce ...

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Looking at the Construction Market

As a counterpart to the medium duty graph a few days ago, let’s take a look at how construction trucks have performed so far this year. Due to the low sales volume of this segment of the market, I’ve combined retail, wholesale, and auction sales into one graph. This is legitimate from a statistical standpoint because we’re looking for a trend rather than absolute numbers. Trucks included are all body types, all model years, adjusted for mileage. As you can see, our data shows an increase from January to February, followed by an essentially flat market. The average mileage, age, and spec mix of trucks sold in January were comparable to other months, so the increase should be at least partly attributable to actual demand. While the construction market in general has been essentially moribund since the recession began, I suspect there was a minor increase in activity in the beginning of the year – not on any macro level, but perhaps on a select, localized level. Again, due to the low sales volume inhere ...

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A Look at the Medium Duty Markets

There has been some discussion recently about activity in the medium duty markets. I say “markets” instead of “market” because the medium duty sector encompasses a huge variety of GVW’s and usage types – everything from cube vans to “baby 8” construction trucks. Rather than rehash word of mouth, let’s look at actual data. We typically rely mainly on our retail sales database for Class 8 price data, but for medium duty trucks we rely more on auction data. This is due to the vastly greater number of medium duty trucks that are reported sold at auctions compared to retail lots. Our AuctionNet partnership with NAAA  is the main reason for this. With that in mind, below are results to date for Class 3 Conventionals, Class 3+4 Cabovers, and Class 6 Conventionals. These segments traditionally see high amounts of activity, and provide a good cross-section of the various usage types. May data was not yet available at time of writing. I will update the charts next week with that data.   Class 6 Con ...

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April Sales Results

With 100% of April sales data locked up in the database, we now know it was an even stronger month than we anticipated.

As mentioned in the most recent AutoFocus Market Update, average selling prices for all sleeper tractors under 1M miles rose $1100 over March. Average mileage for that segment was up about 6000.

The benchmark four-year-old sleeper market rose by just under $1200, with mileage for that group up about 16,000. We have a continuation of price and mileage rising in tandem.

Sales volume was the biggest surprise, adding another 10% to the 25% increase we saw for March.

Look for expanded analysis of this data along with predictions in next week’s GuideLines.

The Fuel Price Speculation Scandal

Just when you thought it was possible to get a handle on predicting fuel prices, you read a piece of news that makes you realize economic fundamentals can only go so far. News broke last week that the Commodity Futures Trading Commission accused two traders of running a market manipulation scheme that may have impacted the price of crude during its runup in 2008. According to the lawsuit, in January of 2008, the traders purchased millions of barrels of crude, which created the impression that supplies were running low at the nation’s central oil hub in Cushing, OK. This drove up the prices of future contracts the traders’ firm already held. The traders then allegedly pocketed the profits and dumped the oil back into the market, sending the contract price back down. They then took positions that profited from that decline. The scheme was allegedly repeated in March of 2008. The activity stopped when the traders became aware that the CFTC had begun to investigate excessive speculation. The case is the first t ...

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Why Truck Tonnage Declined in April

The manufacturing sector was down 0.4% in April due mainly to a drop in auto manufacturing and durable goods. Today’s truck tonnage report indicates that, as expected, trucking was affected by this decline. As reported in Transport Topics, tonnage for April was down 0.7% vs. March. The decline in durable goods (furniture, carpeting, etc.) is mainly attributable to high gas prices competing for consumer dollars. The decline in auto manufacturing was due to parts shortages stemming from the Japan disaster. Here’s what we know about these areas of manufacturing: - Gas prices are currently on their way down, returning closer to their historical relationship to the price of crude. This process should free up consumer dollars and alleviate downward pressure on durable goods. - Auto manufacturing dropped due to lack of parts, not lack of demand. Once parts shortages are alleviated in the 3rd and 4th quarters, the industry should rebound pretty steeply as manufacturers play catch-up. In light of all thi ...

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Preliminary April Market Results

As predicted, it looks like all critical market measures – price, mileage, and sales volume – were up for April.

With about 95% of our individual dealer sales reports in, sales volume is running about 7% behind March’s total. March, as you might remember, saw a 25% increase from February.

It should come as no surprise that average selling price and mileage both look to have increased as well. The sleeper market overall (all trucks under 1M miles) is currently running more than $1100 ahead of March, despite a 10,000 increase in average mileage!

The 4-year-old sleeper tractor benchmark increased less dramatically – about $400 – but average mileage was way up to 437,000 from 412,000.

Bottom line – more trucks are being sold for higher prices despite higher average mileage.