Market experts say truckers should be able to shop for a decent supply of 2006 engines into early 2007. Engines from the 2007 model year, built from Jan. 1 onward, must meet stringent new EPA emissions guidelines, but 2006 engines may be placed in 2007 trucks as long as they are available.
Class 8 inventories will end 2006 at about 65,000 units, which is a historically large inventory, but not out of line relative to current sales rates, says Kenny Vieth of A.C.T. Research. “Presently, the new Class 8 inventory is equivalent to about two months of supply at the present strong rate of sales,” Vieth says. Strong new-truck sales also mean a lot of trades are on the market, which should act as a check on used-truck prices, he says.
September ended with 52,000 trucks on dealer lots, says Chris Brady, president of Commercial Motor Vehicle Consulting. “Fifty-two thousand is a lot anytime,” but that backlog is decreasing quickly, Brady says.
Estimating how many 2006 engines will be available for assembly into new trucks early next year is difficult, Vieth says. “Our estimate is about six weeks of production at the end of 2006 build rate, or about double the normal supply-chain volume,” he says. Using 1,600 units per day — a proxy for recent build rates — would yield a carryover estimate of 48,000 units, or 1,600 units per day for 30 days, Vieth says.
The supply of trucks is only part of the good news for truckers, Brady says, because the economy also is brighter than during the previous pre-buy before October 2002, the last time new diesel emissions standards were implemented. “There’s a large supply of trucks, and you can find what you are looking for.” Brady says. “You couldn’t afford to pre-buy last time because of the recession. The business environment has turned around 180 degrees compared to the previous cycle.”
