With the housing market in recovery and the fracking industry fully ramped up, it would be logical to start to look for a recovery in the Class 8 construction segment. The graph below shows combined retail and wholesale sales data for the most recent three model years for which we have a meaningful volume of data.

At this point, only the 2008 model year has enjoyed an uptick in pricing, with a nice increase starting in the 4th quarter of 2012. 2006 and 2007 trucks were flat in this period. Average mileage was not a major factor in month-to-month changes for any model year. Volume of trucks sold increased mildly in the 1st quarter.

Since the newest model year can function as a substitute for new trucks, an increase in pricing and sales volume is potentially encouraging. At the same time, we would need to see a sustained increase in pricing and volume for more model years before identifying a recovery. Fundamentally, residential construction alone is not going to move the bar substantially. Commercial construction and infrastructure projects would need to come back on-line to stimulate demand to a major degree. As for oil and gas operations, companies in that industry likely purchased new trucks when they ramped up fracking operations.

We will continue to monitor this segment closely and report any developing trends.