“Medium and heavy duty commercial vehicle markets are at the beginning of a three year period of steady growth.” according to a press release from ACT Research Co. LLC.
We certainly hope so. In PMPA’s last Business Forecast Report, our industry’s sales to the heavy truck market fell over 16% from 2007 to 2008.

We don't have data for this year yet, but...

And then 2009 hit.
Here are 6 reasons we think that this truck recovery will be slow and behind GDP throughout the first half of 2010:

  1. Commercial credit availability is still impaired,
  2. Reduction of debt throughout the economy,
  3. Decrease of “stimulus” spending,
  4. General  reticence to invest because of higher than normal risk.
  5. The economy has lost many years of growth- so fewer trucks are needed. (For instance, The precision machining industry sales are 85 percent of what they were in 2000 according to PMPA Business Trends Report for October.
  6. The cost of EPA 2010 Regulation compliant trucks is $10,000 higher. * 

But according to ACT, things are looking up. The industry bottomed out in 2009, with Class 8 heavy truck production falling to a mere 25,000 units in the second quarter. That is down almost 60% from the prior year. Medium duty (class 5-7) production of 22,000 units in the second quarter was 53% below the prior year.
Slow and faltering  growth behind the economy are what we are expecting out of commercial truck market from our vantage point here in Precision Machining Land. We hope  it turns out that we’re pessimistic to a fault.
What do you think? Have you managed to maintain sales in this market? New orders for EPA 2010 Technology components?
(The new EPA 2010 regulations, are designed to reduce heavy truck emissions of Particulate matter, Nitrogen oxides, and Hydrocarbon emissions. While our industry stands to produce components for the new on board compliance technologies (sensors for CEGR (Cooled Exhaust Gas Recirculation Technology) and components for SCR (Selective  Catalytic Reduction) systems,  until the volume s grow, we’re ‘underwater’ in terms of our outlays for tooling compared to sales. )

Deutsche Bank reports that Class 8 truck orders for July were 9100 units, up 8.8% from June’s 8360. June’s 8360 was up 16.5% from the May low of 7176. The last of the EPA07 Truck orders will drive incremental production increases in Q4 2009 and Q1 2010 according to their global markets research report.

Class 8 trucks bring our raw materials and deliver our products.
Class 8 trucks bring our raw materials and deliver our products.

Deutsche Bank’s forecast for industy sales of Class 8 trucks is 90,000 for 2009; 125,000 for 2010. That’s the good news.
The downside is that the USEPA’s Heavy-Duty Highway Diesel Program Rules  required new engines will increase costs. 
“The introduction of new engines in 2010 may impact fuel economy, routine vehicle maintenance, and operational costs,”   according to the ATA website
Not to mention anticipated increase  of cost of the  new compliant class 8 engines: “Class 8 engine costs are expected to increase substantially in beginning in 2010 much like they did in 2007.” (Source : ATA website  , emphasis ours.)
” Navistar said that its exhaust gas recirculation technology will increase International truck prices by up to $8,000 for the 2010 model year. Depending on the specific engine model a truck uses, prices will be $6,000 or $8,000 higher due to compliance with the Environmental Protection Agency’s emissions standards, which go into effect January 1.” Source: Transport Topics
Inferences for the precision machining industry- the US Heavy Truck Market is on the mend, and thanks to the rules already on the books, we can expect yet another round of cost increases for freight to bring us our raw materials and to ship our products to our customers. For those of us making parts for this new generation of engines, this is good news, but it’s inflationary effects will be felt by us all.
How do we spell inflation?