Daimler Trucks North America, the industry sales leader, is not sweating the loss of big chunks of heavy- and medium-duty market share trucks through the first nine months this year.
“Our Class 6-7 trucks are out of capacity,” President and CEO Roger Nielsen told FreightWaves in an October 28 interview at the North American Commercial Vehicle Show in Atlanta. “We built every truck we could. We sold every heavy-duty engine we could.”
Component shortages, including axles and radiators, caused the Freightliner medium-duty plant in Mount Holly, North Carolina, to run at just 65% of capacity.
Layoffs required
That resulted in the October 14 layoff of 450 workers and the end of a partial second shift operation. Both Mount Holly and Freightliner’s Class 8 Cascadia operation in Cleveland, North Carolina, now run a single production shift. Daimler laid off 450 workers at the Cleveland facility at the same time as the Mount Holly layoffs.
Daimler also cut about 250 jobs at its Class 4-8 plant in Santiago, Mexico, Nielsen said.
“Other companies have capacity and were able to take advantage,” he said. “We never capacitized for the market we saw.”
Navistar International Corp. (NYSE: NAV) and Paccar Inc. (NASDAQ: PCAR) subsidiary Peterbilt Trucks Co. reported share gains in medium-duty trucks, whose industry-wide sales are expected to top 100,000 units for a second straight year.
Navistar recently reduced production by 15%, the same amount it added about a year ago. Peterbilt has more trucks waiting to be built than its roughly 15% market share.
“This does not signal any kind of permanent shift,” said Antti Lindstrom, a trucking industry analyst for IHS Markit.
Blockbuster September
Nielsen responded confidently to a question about the 3.1% decline in Class 8 share and 7% decline in Class 6-7 medium-duty share reported with parent company Daimler AG’s earnings on October 23.
“Our Class 8 share is higher now than it was at the end of 2018,” he said. “We rebounded in September after inventory built up throughout the year.”
Daimler Trucks, a unit of Daimler AG (NASDAQ: DDAIF) accounted for 63% of Class 8 orders in the U.S. in September. Nielsen said some large fleet orders landed after several months of year-over-year declines.
“I don’t know what the rest of the guys are doing, but we’re out there selling trucks,” Nielsen said.
Used sales
While others point to declining prices and an over-supply of used trucks being a concern for 2020, Daimler sees things differently.
“We have reports of small fleets giving up their operating authority, so there’s definitely older trucks available out there,” he said. “But the three- to five-year-old used truck market that we do business in is still strong. We see the pricing stabilizing and we do not see an oversupply in those trucks either now or in the future.
Nielsen doesn’t fret about used truck pricing or supply because Daimler customers are on a long-term replacement cycle. Month-to-month gyrations don’t affect that.
“We have some sanity into how we buy and sell trucks,” Nielsen said.