Will New GHG Emissions Prompt a Pre-Buy?

A new report says the industry will likely see a pre-emission boom in Class 8 truck sales in 2019 and 2020, before a sharp drop into 2021 — but others say this time around is different.

The pre-buy is predicted in the new North American On-Highway Commercial Vehicle Engine Outlook report by Americas Commercial Transportation (ACT) Research and Rhein Associates.

“New and revised engine introductions over the next few years, together with emission impacts, will lead to changes in demand,” said Tom Rhein, President of Rhein Associates.

Total North American Class 8 truck production peaked in 2015, ACT noted, and it’s predicting lower demand in 2016 and 2017 followed by recovery leading up to that pre-buy.

However, not everyone is convinced that we will see the same type of pre-buy that we did ahead of the 2007 emissions regulations, which was driven by uncertainty about selective catalytic reduction technology

At the recent American Trucking Associations’ Management Conference & Exhibition in Las Vegas, Martin Daum, head of Daimler Trucks North America, said the new Phase 2 greenhouse gas fuel/economy regulations offer manufacturers more flexibility to achieve the required targets, as well as a longer lead time for developing technologies that will be reliable.

"It’s not that you have to do something tomorrow. so you have time to really study, plan, test, push. Long term planning gets rewarded. And it gives us certainty, with clear targets between now and 2030 for each vehicle and engine category.”

Daum said this should help avoid the disruptive pre-buy cycles that plagued the emissions regulations of the 2000s, noting that we are still seeing the “aftershocks” from the huge oscillation after the 2006 prebuy.

Similarly, when asked about the likelihood of a pre-buy at an ATA MC&E press conference, Volvo Trucks North America chief Goran Nyberg explained that "2021 is also about a matter of credits and when that technology will be brought to market, so it’s not a firm date that we have to meet.”

In fact, at least one OE rep has speculated that truck buyers could be holding off buying trucks waiting for the more fuel-efficient versions that will be coming out to meet the new regulations.

Steve Gilligan, vice president, product marketing at Navistar International, told HDT recently, “We’re ... really in unprecedented territory regarding emissions levels. There was anxiety and strong pre-buys before previous introductions of new emissions technology, in 2002, in 2007 and in 2010. We think what we see here is that people are pretty comfortable with emissions technology, and everybody’s telling customers there’s going to be a fuel economy improvement this time.

“So we may see another kind of purchasing habit, where customers will wait until new models come out to get the improved fuel economy,” he continued. “They are delaying some purchases. Carriers are making money and they can purchase at any point in time they choose to. We are seeing them holding back for now, and we think they will come back to get the new, more fuel-efficient models.”