Despite a muddy and bewildering set of economic indicators, truck makers can expect a couple more banner years ahead.
That’s the view of Mack Trucks Senior Vice President of Sales Jonathan Randall. He was addressing trade-press journalists during a press event last week in Bethlehem, Pennsylvania.
“We've already forecasted this year at about 300,000 units for Canada, USA and Mexico, and while we haven’t yet put a number out, we forecast and we expect that demand next year will be stronger than this year,” Randall said. “If you look at what gives us that confidence, it’s the word backlog.”
Randall said truck makers have been unable to keep up with replacement demand, leaving fleets with aging equipment and rising maintenance costs. Pent-up demand will keep order boards full for the foreseeable future, he believes, in spite of the sometimes-contradictory indicators.
Most of the reliable indicators seem to suggest we’re heading into recessionary territory. Spending is slowing, interest rates are going up, and trucking economic activity is cooling -- albeit from previously very high levels. But at the same time, manufacturing orders are climbing, and the unemployment rate remains low, which Randall pegs as one of the main challenges faced by industry these days.
He noted GDP is down about 3.4 points (depending on your definition of a recession), and the forecast for next year is probably 2% or less.
“That tells you that things are definitely slowing,” he said. “But we have an interesting tug-of-war happening between these normal economic indicators that forecast — or preempt — a recession versus incredibly strong demand. It's kind of confusing.”
Still, at a time when such indicators might be causing some jitters, customers are not backing away from their orders.
“No one's calling to cancel trucks,” said Randall. “No one's calling to say, ‘Hey, I know I told you I was going to take 75, but really, I'm only going to take 50. They tell me ‘I'm gonna take 75, and can you send me another 50, please. I need them desperately.’”
Long-Haul, Medium-Duty, Vocational Segments
Randall said the long-haul segment is what is driving truck registrations at the moment, accounting for about 52% of all new registrations. Last year at this time, that segment accounted for 47%. Mack isn’t a big player in long-haul, but the company has seen some growth there, thanks to interest in its Anthem model.
“Long-haul is driving that train, and it will continue to drive that train for the foreseeable future,” he said. “That makes the Anthem that much more important to us from a growth standpoint. We have seen some nominal growth there of about a half a percent, year to date.”
Mack has also done well with is recent entry into the medium-duty market. The MD model now claims 4.7% market share after less than two full years of production.
“We've gone from zero to 100 miles an hour pretty darned quickly on the medium duty side,” Randall said. “We're really happy and proud of that project.”
When asked about the Mack Granite’s place in the market, Randall was curiously non-committal. He said there have been gains for its long-standing vocational model but emphasized that it would not be thrown under the bus in pursuit of additional market share in the long-haul and regional-haul segments.
“We're not going to let that go by any stretch of the imagination,” he said. “Any focus that we have on long-haul, on regional-haul, and the growth we need to have there does not come at the expense of the [Granite]. But we also recognize that 75% of the registrations are on-highway registrations, and we have to grow there. We have to be stronger there as well.”
Randall hinted that the Volvo group is planning a $2 billion investment in North America for new products.
“We're excited for what that is going to bring to us,” he said.