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Even many of the most frugal forecasters and dire predictors did not expect the trucking industry to fare as badly as it did in 2007. A cliff event for new truck/trailer sales and OEM truck/trailer build was expected after the 2006 pre-buy in advance of stricter emissions regulations.
Though final 2007 economic figures were not yet available as of press time, the cliff will be steeper and deeper than what many expected. New Class 8 truck sales are predicted to be down about 45 percent from 2006. OEM production will be down even more.
The reasons are largely a soft general economy and the housing market crisis, which have weakened freight tonnage by approximately 1-1⁄2 to 2 percent versus last year. Add to this the record number of trucks produced in 2006, and many carriers have more capacity than loads, resulting in trucks sitting idle in fleet yards or unsold on dealership lots.
The aftermarket was spared from the full brunt of these forces in 2007. While most distributors report business as far from robust, it generally was stable. A stronger first-half helped balance out weaker second-half performance as the economic troubles made their way into the parts and service sector.
“The landscape of the market in 2007 went from somewhat weak to weaker,” says Tom Stewart, president of Carolina Rim and Wheel. “The first six months, at least for our business, held about even with 2006. But through the second six months we’ve definitely seen a slowdown, and it doesn’t look like it’s going to get a whole lot better for 2008 until we see housing start to come back. And I think that’s going to take a while, especially with the mortgage situation.”
Adds Vince Mathews, owner, Capitol Clutch & Brake, “Generally the dynamics that affected the nation had an impact on the truck parts market. The loan default crisis, along with the accompanying drop in housing starts, was a huge factor. Fewer homes mean fewer new shopping centers, roadways, material hauling, concrete and every other service that is related to construction.”
