Major Truck Manufacturers Face Decline in Sales
Although the demand for long-haul freight vehicles is at an all time high, trucking enterprises are purchasing fewer vehicles, which have given rise to job cuttings among the truck manufacturing companies, causing the big rigs to amass and gather dust in record-numbers, on the truck dealership lot.
Most of the trucks in these lots were ordered in the months when the economy was displaying strong signs of potential investment opportunities, and the carrier companies booked the vehicles to keep up with the increasing demand and orders from commodity manufacturers and retailers. However, a slower rise in economic growth has forced fleet enterprise to abandon their expansion plans, in favor of maintaining and upgrading their existent fleet.
According to the figures compiled by the industry research facility FTR, the decline in Heavy-duty truck orders is reported to be nearly 37% compared to 2014. According to the reports, fleet companies are waiting to gauge to consumers’ interest and volume of spending during the holiday season to make the decision of buying new vehicles, which can cost $150,000 each. The sharp decline in the heavy-duty truck orders is one of the black spots on the economy as it is gradually transitioning into the first financial quarter of 2016.
The trucking corporations are holding out their hope for an enhanced consumer demand, but are still hesitant to expand. This has caused the trucks and parts manufacturing facilities to reduce their payrolls and scale-back production in their plants.
The recent reports by Daimler AG state that it plans to cut back about a third of its 3,100 workforce at the Cleveland, N.C. Freightliner truck assembly facility. Its competitors Volvo AB and Paccar Inc. also disclosed that they are considering reducing workforce at their U.S. manufacturing plants. Navistar International Corp. has already decreased its staff by large numbers, when it dismissed 1400 workers before the end of its last fiscal year.
Moreover, Cummins Inc. also reported that it will be reducing 2000 jobs, worldwide. On the other hand, truck dealers are struggling as they have over 57,000 un-sold trucks gathering dust in the dealer bays. According to the recent data, compiled by WardsAuto Group, this number is greater than 2006. To combat this issue, several companies are offering their buyers added incentives of cash rebates and no money down benefits, which are usually offered in recession.
Eric Jorgensen, chief executive of JX Enterprises Inc., which owns and operates 19 truck dealerships in the Midwest, said in a statement, “It is a buyer’s market. We went from a situation where there seemed to be a shortage of equipment to one where there is more equipment on the road than what’s needed.” However, FTR predicts that at least 260,000trucks will be sold this year.
Dennis Slagle, president of Volvo Group Trucks North America, which markets vehicles under the Volvo and Mack brands, explained their position by saying, “Our safety net is the macro economy. If you believe in 2% or 2.5% growth next year, that means a lot of trucks running around.” – See more at: http://truckernews.com/major-truck-manufacturers-face-decline-in-sales-p635-90.htm#sthash.sIyPdEyj.dpuf