Image
Truck sales have fallen with the economy. But as stimulus spending increases, producers will put their trucks into service in greater numbers.

The Outlook for producers' fleets is not very different from that of the major auto companies. The good news is that ready-mix trucks and pickups are safer, more fuel-efficient, and more reliable than ever.

The bad news is that sales have slowed to a trickle. The reason is obvious: the economy.

New trucks are vastly improved over those from just a few years ago. Most have stability systems and anti-rollover options. Optional radar-based active cruise control actually applies brakes if needed. Fuel economy is better now than when emissions controls were introduced in 2002. Maintenance intervals have been extended and trucks are more reliable. And deals are plentiful.

But what may be a bargain may not seem like one. The new features on trucks come with higher prices, so a 10% discount for a truck that is 15% higher than the one it replaces won't seem like a bargain. If you're looking to replace an 8- or 10-year-old truck, you'll be in for sticker shock. Emissions controls increased list prices by $6000 to $10,000 in 2007, and new equipment for 2010 regulations will add $9000 to $10,000 more.

Fleet managers are trying to find the right size for their fleets. In most cases, purchases of new trucks were stopped, often several years ago. Most are selling older equipment to help control maintenance and operating costs. Some are mothballing their oldest vehicles and keeping them available for any upticks in the economy.

Conditions today don't favor sellers. But many fleet managers feel that any hit on used truck prices due to oversupply and weak demand is more than offset by savings on insurance, depreciation, and other fixed costs of ownership. One creative fleet manager downsized and upgraded his fleet's age by bartering a larger number of older trucks for a smaller number of new trucks. No money changed hands.

One producer that just parked its surplus trucks recently brought back more than half the drivers it laid off. It was partly due to new business and partly because the producer was overly conservative in projecting its personnel needs. With business down, most have simply stopped buying trucks.

Tight credit

Credit availability is always a concern. Forward-looking producers described locking in lines of credit years ago, but even with funds available, they are reluctant to spend unless absolutely necessary. All capital expansion seems to be on hold, especially for truck fleets.

One fleet manager has not bought trucks for three years. When times were good, management cleared all the fleet's debt. With a very positive balance sheet, credit will be there for expansion when needed.

Several fleet managers mentioned that while prices are higher, vendors are getting more creative with other parts of the transaction. Besides discounts, they are reducing interest rates as low as zero percent, extending loan periods, and including free scheduled preventive maintenance.