Truck sales expected to improve later in the year

With all industrial sectors including forestry hard hit by the economic downturn truck sales in Ontario and across the country have been dramatically affected. In addition to the downturn changes to emissions standards in the coming year and the buyer skepticism that comes with it are also hampering sales. Dealers are thinking it will be into the spring before they start to see any real positive changes in sales.

Marc Levesque of All-North Truck Centre in Sudbury says 2010 with be slow to start but there is hope that things will improve as the year progresses.

"Guys are holding back because they don’t want to be the guinea pigs on the new engines. Up north here there is not much work being done in the forest. We rely on the logging industry. The over the highway plywood and lumber haulers are all down for the winter from as far west as the Manitoba border to Quebec. Sawmills and paper mills are down in production so that is affecting our industry drastically," Levesque said.

Levesque said another factor that is making the new engine requirements hard to swallow for purchasers is the additional $10,000 added to the cost of the truck.

"There is supposed to be a fuel improvement but that has yet to be proven so there are a lot out there who want to let the other guy try it out first," Levesque said. "A few fleets are making a move and buying it though. They are forecasting that across North America that there will be more activity in the fourth quarter as more people get comfortable with the new technology."

Like most dealers, Levesque is looking to the spring and infrastructure spending for a much needed boost in sales.

"We have guys that stopped in recently looking for trucks because they are involved with infrastructure improvements," Levesque said. "That’s where we did most of our sales last year, guys buying dump trucks and specialized equipment because they had money from infrastructure spending."

"Over the highway stuff was not very good last year and it’s been the same for most other dealers. I think it will be the same this year, any activity this spring will be vocational trucks. A lot of tenders have been coming out from municipalities last year to do a pre-buy on snowplows and dump trucks before the new engines have come out. That’s giving the industry a bit of a boost," Levesque said.

Elsewhere in Sudbury, Maurice Belanger of Cambrian Truck Centre also believes it will be a slow start for the first half of 2010.

"The first six months will see a slow but steady increase in both the highway and logging segments. The demand for lumber has started again, the industry seems to be getting a little bit busier and hopefully it will continue," Belanger said. "I do foresee that the second half of this year is going to be better. It’s going to be a very, very slow increase if any for the first six months. The only thing that is going to help us is if there is any construction."

Belanger sees the 2010 emissions engines playing a large role in sales for the coming year.

"From the reports we have seen there is better fuel economy and probably less maintenance with the new engines," Belanger said. "Some people are cautious and suspicious as to whether the claim by the engine manufacturers are true or not but, from what we are seeing there seems to be up to a five percent saving in fuel cost in the ‘10 engines versus the ‘07 emissions engines."

Despite buyer trepidation concerning the new engines, Belanger believes that it won’t affect sales indefinitely. As the comfort level with the new technology increases so will sales. Belanger also says that as the economy slowly improves purchasers will begin to replace those vehicles that they have stretched a year or two longer than usual.

"Hopefully the HST will help also. If we understand the law as it has been explained to us at this point, truckers and companies will be able to get back what we now call the PST and the GST. The harmonized sales tax should be going back 100%," Belanger said.

Despite the fact that most truckers are holding on to their vehicles longer there has not been the increase in business at most service departments throughout the industry that might be expected. Belanger points to the fact that some companies have a lot of vehicles parked and are stealing parts from those trucks to keep the units that are running on the road. Belanger remains hopeful that the arrival of construction season in the spring will mark the beginning of the turnaround.

"If those individuals or companies that have been delaying their new truck purchases can get a good contract or two it may encourage some of them to buy this year. Things may pick up especially if some of them consider buying the pre-2010 new engines," Belanger said. "There seems to be more inquiries right now for units. Some customers are looking at dump trucks for the spring and wondering if there are any of the older engines still available."

Dave Harrington of TMS Truck Centre Ltd. in Sault Ste. Marie says any potential truck purchasers this year are going to want to check out the change in emissions standards and analyze if it is going to work in their favour especially when it comes to fuel economy.

"I think that as far as truck sales are concerned vocational trucks will be the leader initially and then hopefully the need for highway tractors is going to kick in later in the year," Harrington said. "Our repair facilities are running at full speed but truck sales are very depressed right now as it is right across the country. It will change but it will take a little more time. Owner operators are stretching their trucks, instead of trading at five years they are going into their sixth and seventh year. As a result they are spending more money on repairs."

Harrington notes that the new engines using urea fluid has been a proven technology in Europe for many years but recognizes that it is new to North America and as such will require an adjustment period from users.

"It sure would be nice to see lumber start moving north and south again, the loss of the mills that we have experienced has of course generated quite a downturn in truck population as well," Harrington said. "If we could see lumber moving again we would see more trucks on the road and that will work to our advantage."

"There have been a lot of operators who have their own picker trucks who have sold them," Harrington said. "Those that are remaining are staying busy but I would say the population of those trucks is not going to come back until we start harvesting more trees and opening a few mills."

At Kenworth Truck Centre in Sudbury, John Sheridan is saying much the same thing as Harrington.

"Truck owners are still not ready to make that jump into carrying another fluid and they have worries about troubles that may be caused mechanically. They are not sure of the hazards. It needs to be known that DEF is a non-toxic, non-polluting, and non-flammable substance. If D.E.F. does happen to spill, cleaning it and rinsing with water will suffice, just like you would do if you spilled another truck fluid either on or in your truck.

People are still waiting until they have to have a truck," Sheridan said. "While the dollar is close to par which helps in truck final cost, trade values are very low, which affects a decision to invest in a new truck. "There is lots of quoting, I’m quoting more than I was last year, which means when sales do start, its going to be very busy."

Sheridan says when purchasers do get comfortable with the new engines and the new regulations, it will boost manufacturing. "One way or another, the new emissions standards are going to have a large effect on the industry in 2010. The main thing that we sales people have to do is to make our customers aware of the truths of the way engines will respond, and the truths about the use of DEF. It is still way too early to tell."

"If the mines go back to work and the government continues to improve roads that’s definitely going to be a boost to the trucking industry."◊