Summary
The impact of clean air initiatives has landed in the laps of its participants. The old adage of "no pain, no gain" is an unfortunate reminder that any change intended for a greater good will generate short term consequences. In this case, 2006 Class 8 purchases reflected more of advance buys normally aggregated over several years versus scheduled replacements, resulting in record sales for less environmentally friendly engines with purportedly better fuel mileage than the cleaner burning 2007 models mandated by federal law. The results: look to '07 Class 8 new truck sales to number in the 160,000 unit range compared to last years nearly 290,000 units. This doesn't bode well for production numbers for DC's Freightliner; Paccar's Kenworth, Peterbilt, and Western Star; Navistar's International; or Volvo's Mack and Renault badges. But to offset this real "pain" is the promise of improved fuel economy, lighter truck cab and frame designs, and the prospect of breathing a bit easier.
Analysis
No one wants to see layoffs or plant closings. But smart manufacturers recognize the challenge of not only conforming to the specifications of the 2007 mandate, but as an opportunity to improve engineering specifications for the next round of requirements in 2010 and beyond. In addition, the importance of this challenge is enhanced by a factor that none of the truck manufacturers can singularly address, namely, that the average age of a professional truck driver in the US is approaching 60. That's right, the gap in hiring and retaining qualified drivers has resulted in many large fleet operators parking their rigs, some of these the very same 2006 models that pushed sales figures off the charts.
Smart money says that Original Equipment Truck Manufacturers (Truck OEM's) will weather this predicted sales slump and use their justly deserved profits to re-engineer the Class 8 truck to include fuel efficiency targets, continuously improve safety features, and design a vehicle with the 20 or 30-something aged driver in mind that will enable the fleet operators to close the gap in what is the single most critical component within the truck industry, namely, having a driver present to receive the keys to start the engine.
