Citing rising commodity prices, Navistar has announced that it will raise truck prices by up to 2% in the coming year.
That marginal increase will be offset by the overall value that new model trucks provide to customers, said Michael Cancelliere, president trucks and parts, during a media briefing at the American Trucking Associations annual Management Conference & Exhibition.
“We continually improve our own productivity, but there is a point when suppliers raise costs to us that we can’t just absorb 100% of it,” he said. “We still have to be competitive. It’s a competitive industry.”
The price changes will vary by model, depending on the level of content in the different trucks.
“If you can get better fuel economy on a daily basis over a three-, four-, five-year period, I’m sure that’s worth well in excess of the increase,” Cancelliere said. Every day of downtime is also valued at about $1,000 on the low side, not counting intangible costs such as dissatisfied drivers and shippers. Reliable trucks and effective service networks make a difference there.
The market itself also appears to offer a growing demand for new trucks.
Overall, Class 6 and 7 truck orders are up 14.3% year over year as of August, while heavy vehicle demand was up 39%, and the demand for trucks in severe service applications was up 25.5%, Cancelliere said. Navistar’s share of the medium-duty and Class 8 market has increased 1.4 points year over year, he added.
Economic growth accelerated in the second and third quarter, Cancelliere said, projecting that North America’s market for Class 6, 7, and 8 vehicles will continue to rise.
“Right now (with) the truckload carriers, freight is strong, capacity is tight, rates are up,” he said of the current economic environment and strong orders for sleepers.
Last week, Navistar secured a $200 million order from U.S. Xpress, and he says another unnamed large fleet has placed a big order of its own.
John G. Smith is the editor of the award-winning Canadian publication Today's Trucking. This article was used under a cooperative editorial sharing agreement between HDT and its Canadian counterpart.