Arrow warns of used truck shortage
Inventories likely to decline sharply, CEO says
As Arrow Truck Sales celebrates 60 years of selling used trucks, the company’s new chief executive said that inventories of used trucks for sale will go from a glut not that long ago to a shortage in the near future.
As of late June, Arrow Truck Sales’ retail sales were up 60 percent year over year, while credit applications were up 27 percent.The inventory of used trucks in May was down 33 percent from May 2009, and “we’re getting fairly close to a normalized inventory,” said Steve Clough, president and chief executive officer of the Kansas City, Mo.-based used truck remarketer, which is owned by the Volvo Group. Clough, who began his career with White Motor Co., had served as chief financial officer of Arrow Truck Sales since the company was acquired by Volvo.
Other trends are pointing to improvements in the used truck market, Clough said in late June during a session with trucking journalists in Kansas City. At that time, Arrow’s retail sales were up 60 percent year over year, and credit applications were up 27 percent. Arrow finances about 45 percent of the trucks it sells.
Used truck values are firming as well, but they had nowhere to go but up. Clough pointed to NADA data showing that even in absolute dollars – meaning not adjusted for inflation – the price of a midrange Class 8 sleeper in 2009 was comparable to the price in 2002 and was the lowest in many years.
Looking at the fundamental supply and demand dynamics, used truck inventories are destined to decline sharply, Clough said. Last year, many 2005-06 prebuy trucks came into the secondary market, and there also was excess equipment due to failures and repossessions. “Supply mushroomed in 2009, while demand was weak.” But low-mileage used trucks are disappearing rapidly, although there remain “a fair amount” of 400,000-mile trucks.
With low new truck sales in 2007-09, the supply of used trucks is about to drop, Clough said. “There will be a shortage of used trucks.” Even if some analysts are right that lenders will demand trucks back from so-called “zombie truckers” – carriers that are in arrears on note payments – as used truck values strengthen, the result probably will just be a welcome increase to soften the inevitable shortage, Clough said.
Arrow Truck Sales was founded in April 1950 by business partners Jerry Nerman and the late Melvin Spitcaufsky; Nerman turned 90 in February and retired from the company just this year. Arrow currently operates 18 locations in the United States and one location in Toronto. The company carries a variety of makes and models; Volvo and Mack typically represent less than half of Arrow’s inventory.
– Avery Vise
In Brief
* Allison Transmission dedicated a new hybrid manufacturing plant in Indianapolis. Once operational, nearly 100 workers will be capable of producing more than 20,000 commercial-duty hybrid propulsion systems annually.
* Eaton Corp. and Linde Hydraulics entered into a global strategic alliance where Eaton will add Linde’s range of high-pressure piston pumps, motors and valves to its portfolio, and Linde will offer Eaton’s medium-pressure piston products.
* BorgWarner’s Cool Logic variable-speed fan drives now are standard equipment on Mack Granite, Titan and Pinnacle trucks.
* Haldex Commercial Vehicle Systems selected Kit Masters as its supplier of remanufactured fan clutches, fan clutch rebuild kits and accessories.
* Eaton Corp. acquired EMC Engineers Inc., an energy engineering and energy services company that modernizes mechanical, electrical and control systems, and provides energy modeling and analysis, facility commissioning and energy savings performance contracting.
* Penske selected Yara’s Air1 brand of diesel exhaust fluid to be a primary supplier of DEF across the United States and Canada.
* Cummins Inc. is expanding its High-Horsepower Technical Center and high-horsepower engine product line at its manufacturing facility in Seymour, Ind.
* Westport Innovations Inc. announced that the Westport GX 2010 15L engine has been certified by the U.S. Environmental Protection Agency to 2010 emissions compliance.
Truck owner satisfaction decreases after nine months, J.D. Power says
According to the J.D. Power and Associates 2010 U.S. Heavy-Duty Truck Customer Satisfaction Study, Class 8 truck owner satisfaction peaks in the first nine months the truck is in service, then decreases notably. The study examining 2009 model year trucks was conducted in March and is based on 1,682 responses from primary maintainers.
Results showed that satisfaction levels peak during the first nine months of usage, averaging 768 on a 1,000-point scale. Between 10 and 14 months of usage, satisfaction tends to decline by an average of 20 points. After 14 months of ownership, satisfaction declines by an additional 25 points, on average.
The study ranked makes based on scores in seven categories: overall satisfaction, engine, transmission, ride/handling/braking, cab/body, cost of operation and warranty. International ranked highest in the vocational truck segment with an index score of 775 on a 1,000-point scale. The truckmaker also finished first in dealer service with an index score of 844.
“Many of the quality issues with heavy-duty trucks begin to appear after the 50,000-mile mark, which typically occurs around nine months of ownership, and more problems equate to lower satisfaction,” says Todd Markusic, senior director of the commercial vehicle practice at J.D. Power and Associates. “Unfortunately, the change in quality can be fairly dramatic, given the number of problems truck owners experience increases by roughly 70 percent on average after 50,000 miles.”
To see full results of the study, go to www.jdpower.com/business/ratings/heavy-duty-truck-ratings/vocational.
– Jeff Crissey
Peterbilt, Kenworth deliver first trucks with Paccar MX engines
A Peterbilt Model 386 equipped with the first production Paccar MX engine was delivered to McClymonds Supply & Transit Co.A Peterbilt Model 386 equipped with the first production Paccar MX engine was delivered to McClymonds Supply & Transit Co. during a ceremony at Peterbilt’s facility in Denton, Texas.
“The first Paccar MX produced at the Denton facility signifies an increased level of powertrain integration and vehicle optimization,” says Bill Jackson, Peterbilt general manager and Paccar vice president.
Costco Wholesale Corp. became both the first Kenworth and Paccar Leasing customer to receive a 2011 Kenworth production truck equipped with a Paccar MX engine.The Paccar MX – available in Peterbilt Models 587, 388, 386, 384, 367 and 365 – has a horsepower range of 380 to 485 hp and torque outputs up to 1,750 lb.-ft. with a displacement of 12.9 liters. The company says this power range, combined with a fuel-efficient lightweight design, makes the 2010 Environmental Protection Agency-certified Paccar MX suited for both over-the-road and vocational applications.
Costco Wholesale Corp., a national wholesale club operator, become both the first Kenworth and Paccar Leasing customer to receive a 2011 Kenworth production truck equipped with the new engine. During a ceremony at Costco headquarters in Issaquah, Wash., Costco officials received the keys to a new Kenworth T660.
Full production for the MX engine is slated to begin soon at the company’s all-new $400 million plant in Columbus, Miss. n
