If paying $4 a gallon at the pump doesn’t sour you on driving a full-sized sport utility vehicle, now is the time to buy one.
Dealers are offering tempting incentives on trucks and full-sized SUVs, and used models are on sale at clearance pricing. That’s primarily because many motorists are abandoning the gas guzzlers for compact cars or hybrids that get better gas mileage.
“The more there is, the less they’re worth. Supply and demand,” said Gerry Perrault, new car manager at Serafini Nissan Volvo in Vestal. “Everyone’s looking to bail out of them and it just brings the value of them down significantly.”
As gas prices approached and surpassed $4, major shifts occurred in the marketplace. Nationally, automakers are struggling financially and slowing production of fuel-consuming vehicles, including the formerly popular Ford F-150 truck. Ford, GM and Chrysler all recently reported double-digit declines in full-sized SUV and truck sales.
Meanwhile, cars are flying off dealers’ lots, and some prices are climbing because of increased demand.
“I’ve never sold more cars here — ever,” Perrault said. “I wish I had more inventory.”
Today, a shopper who peruses the lot of a used car dealership can see recent model SUVs selling for only a few thousand dollars more than an older-model gas-sipping sedan.
For example, at Mark’s Auto Sales in Endicott, you can buy a 2004 Nissan Sentra with 70,000 miles for about $8,000. Or, you can buy a 2005 GMC Envoy with 42,000 miles for a little more than $10,000.
The Sentra, with a highway rating of about 27 miles per gallon, is priced about $1,000 more than it would have been six months ago, a dealer said. Meanwhile, book value on the SUV, which gets about 19 mpg on the highway, is about $18,000 — 44 percent higher than today’s actual selling price.
“I’ve been at it 30 years and I’ve never seen a market swing of that magnitude,” said Mark Ogozaly, owner Mark’s Auto Sales on Harrison Avenue.
Though nationally, SUV sales have slowed, Ogozaly said he has sold 50 percent more of the vehicles this year compared to last year. For some customers, the reduced price of a loaded SUV is tempting, especially since months ago the traditionally expensive vehicles may have been out of a buyer’s price range, he said. For other customers, who might have large families or more space needs, lifestyles can’t always be squeezed into a small vehicle.
“Not everybody can drive around in a subcompact,” Ogozaly said.
Endwell resident Jim Coyle recently spent about $10,000 on a used 2006 Buick Rainier at Mark’s. Spending more for a hybrid vehicle wasn’t worth it to Coyle, he said, since he figured it would take 10 years before his gas savings broke even with the cost of the fuel-efficient car.
“We only drive like 10,000 miles a year,” Coyle said. “It’s comfortable; it’s not economical for sure. It only gets 14 miles a gallon.”
Not only will full-sized SUV shoppers get a good price, but they’ll also have a lot of choices, unlike customers looking for cheap used cars. The used car lot at Serafini Nissan Volvo is jammed with SUVs and trucks, making up about 75 percent of the inventory, Perrault said.
Manufacturers have raised new cars prices a few hundred dollars because of the demand, he said. Two years ago, the dealership sold three trucks or SUVs to every car. Today, five cars are sold for every one truck or SUV.
“Our inventories are dangerously low right now because of it,” he said.
New car dealers are offering specials, including cash back and gas deals for customers who buy trucks and SUVs. At Miller Dodge, buyers who pick a vehicle from the Dodge line will pay no more than $2.99 for a gallon of gasoline for three years. Buyers interested in a Nissan Titan truck could be offered zero percent financing and a $5,000 rebate. The truck, which starts at $25,000, gets 17 mpg.
Ashok Leyland Ltd, India’s second-biggest bus and truck maker, said on Monday vehicle sales in March rose 27 percent to 10,698 units from 8,437 units a year earlier.
Ashok Leyland, which has ventures with Japan’s Nissan Motor Co for trucks, engines and technology, said domestic sales rose 20 percent to 9,542 units from 7,929 units.
Exports rose 128 percent to 1,156 units from 508 units, it said.
It’s probably an indication of how bad things are in the auto industry when General Motors can remain nonchalant about a three-week strike at the main axle and drive-shaft manufacturer for its trucks, American Axle. Although the strike has shut down all or part of 29 plants employing more than 42,000 workers, GM maintains it isn’t hurting business.
The problem — or the benefit, depending on how you look at it — is that truck inventories remain high. Sales of GM trucks fell 20% in February.
Automakers recognize revenue for their cars and trucks when the vehicle rolls off the assembly line, not when you drive it off the lot. That’s why GM CEO Rick Wagoner can say the first quarter will look bad but the underlying business remains unchanged. The trucks sitting on dealers’ lots have already been accounted for in the books. If the company can reduce that inventory now, it’ll write off the quarter as a bad one but can then focus on selling its new trucks beginning in Q2. When the strike ends and production begins anew, GM’s “sales” are going to look robust.
Yet it’s also why GM is in so much trouble. It will need to replenish that stock, but it doesn’t mean that people are actually buying the trucks. GM may very well find itself in the same situation it was in before the strike. Moreover, General Motors had already reduced its year-over-year production goals for the second quarter by about 9% to 672,000 trucks.
GM can afford to play this game only so long. Toyota has been heavily promoting its Tundra pickup, and the Ford F-150 still remains one of the most popular pickups, even if sales are soft. With oil at more than $100 a barrel and credit tight, truck makers need to fight over every last sale.
However, the damage is already spilling over to GM’s other suppliers. Lear has laid off 1,100 workers at 10 plants, and Tenneco has laid off hundreds. With American Axle having been one of the more financially stable suppliers, a long strike would have a domino effect on its more precariously positioned rivals. GM may have to start bailing out other suppliers the way it is Delphi.
One Deutsche Bank analyst has pegged the cost of a three-month strike at American Axle at $3.5 billion worth of cash flow to GM. A company that reported a massive loss of $38.7 billion for 2007 can ill afford to be cavalier about what’s happening at American Axle.
AB Volvo’s subsidiary Mack is launching a new prestige truck, Titan by Mack(TM). The model is developed specifically for heavy haulage and construction work and is equipped with the new 16-liter MACK(R) MP10 engine.
The launch of the Titan by Mack will be in conjunction with the CONEXPO-CON/AGG(R) 2008
Exposition in Las Vegas being held March 11-15, 2008. The new model puts driver environment and comfort in focus and is designed to handle the tough conditions, for example, at mines, in forestry work and on construction sites. Major emphasis was also placed on reducing noise levels and the vibrations that arise in heavy work.
The truck is equipped with a new 16-liter engine, the Mack MP10, which is available in 515-, 565- and 605-hp classes and is approved in accordance with the US’07 emissions standards.
Delivery of the Titan by Mack to customers is expected to begin in late 2008.
New heavy-duty truck sales in February were up slightly from the month before but, by just topping the 10,000 units mark, the total rests mired in the shallows of the industry sales tide that rolled out last June.
According to figures provided to the Trucker by Ward’s Automotive, Class 8 sales in February totaled 10,229 trucks in the United States, compared to 9,600 in January, a month-to-month gain of 6.6 percent. The rise continues an up-and-down trend going back to October 2007, which showed the first month-to-month improvement of that year. That upturn was followed by a return to red in November and a positive swing in December. Those gains, however, came in closer to the 12,000 unit mark (11,769 and 12,034, respectively). The February total is more in line with the 10,020 average registered during the other six months.
Reported sales were 16,471 in February 2007, making for a decline of 37.9 percent compared to the same period. Even so, the February report was best year-over-year comparison since last March, after which the totals routinely were down more than half from the record year sales posted in 2006. Still, the total marked the slowest February since 2003 — and the 8,124 that year is the lowest one-month report on a spreadsheet dating to January 2000, a period of 98 months.
Historically, January and February are the slowest months on the sales calendar.
Though more severe than generally anticipated, the emissions mandate-driven slump of ’07 could linger, depending on the economy, insiders say. And while manufacturers and industry analysts agree the narrow window ahead of substantial equipment changes required by 2010 standards should mean sales return to peak levels later this year through 2009, there has been some waffling on when the turn around in Class 8 should be expected.
In a closer look at the most recent Ward’s data, Freightliner’s 2,456 units in February paced the OEMs in volume, narrowly besting International’s 2,245 mark — as the traditional industry-leading nameplates continue the recently competitive race for the top spot.
The Class 8 field took substantial hits in the order book compared to the same month a year ago — especially those which, at the beginning of 2007, continued to book strong sales based on a surplus availability of pre-2007 emissions-compliant engines. Freightliner was down 53.6 percent, at the upper end, while International dropped only 5.1 percent.
Among the other OEMS, compared to January 2007, Sterling was down 57.2 percent on Class 8 sales of 527 trucks, followed by Western Star (-51.8 percent, 92 trucks); Peterbilt (-40.2 percent, 1,181 trucks); Mack (-35.9 percent, 848 trucks); Kenworth (-26.0 percent, 1,3,78 trucks); and Volvo (-17.0 percent, 1,489 trucks).
Compared to the month before, only International (down 9.4 percent) and Western Star (down 8.7 percent) lost ground.
Month-to-month figures posted by the OEMs showing gains were paced by Mack (35.7. percent); Kenworth (26.3 percent); Sterling (10.6 percent); Peterbilt (8.1 percent); and Volvo (1.0 percent).
Month-to-month numbers, it should be noted, can vary greatly — especially between quarters or from year’s end — depending on an OEM’s sales incentives and reporting procedures.
With only two months in 2008 to go on, Freightliner’s year-to-date market share is 24.7 percent (4,892 units sold), with International at 23.7 percent (4,701). The sales pie also shows Volvo with a 14.9 percent slice (2,963 units), followed by PACCAR brands Kenworth (12.1 percent, 2,393 units) and Peterbilt (11.4 percent, 2,266 units).
For comparison, Freightliner finished 2007 with a market share of 24.8 percent for the year, with International holding 19.7 percent of the Class 8 total sales in the U.S.
The predictions on doubling of heavy truck production in Russia in 2007 tuned out to be mostly correct. Still, the dynamic growth of sales failed to satisfy the demand - customers had to wait for order execution for months.
The market leaders are now trying to keep and strengthen their positions by expanding Russian production. The growth of Russian economy and construction boom fuel the trucks fleet growth. According to Abarus Market Research, in 2007 total truck market in Russia totaled 327,600 vehicles, a 26% growth as compared with 2006. Heavy truck market grew even faster. Until last year more than half of the market needs was covered by KAMAZ products. In 2007, the demand surpassed the production growth, which translated into changes in the market structure. As a result, 55.6% of heavy trucks were imported from other countries.
Tags: heavy trucks
Volkswagen AG, the largest investor in German truckmaker MAN AG, is discussing whether to power its heavy trucks built in Brazil with engines made by MAN, Germany’s Handelsblatt newspaper reported, citing company sources.
A spokesman for MAN declined to comment on the article, to be published in the business daily’s Friday edition, while a spokesman for Volkswagen’s commercial vehicles division rebuffed any specific plans.
“It’s generally not that uncommon in the truck industry to purchase engines from third parties, but in this particular case there is no concrete plans to use MAN engines in the heavy trucks built in Brazil,” the VW commercial vehicles spokesman said.
Currently U.S.-based Cummins Inc and Navistar International Corp’s Brazilian unit MWM International Motores supply the engines for VW’s Brazilian-built heavy trucks.
A closer cooperation between Volkswagen and MAN, which already have a distribution partnership in Germany, could put additional pressure on Swedish rival Scania to give up its resistance to a three-way truck alliance.
VW and MAN together control over one-half of the votes in Scania, but have refrained from steamrolling over the fiercely independent management at the Swedish truckmaker in the hopes of reaching a friendly deal beneficial to all sides.
Vehicles to begin helping fill potholes in two to three weeks
Each truck will cost the city $105,000. Funds for the new units were allocated in the 2007 budget, Bevens said.
Later this year, another patch machine will be purchased, this one from the 2008 budget.
At present, Bevens said, the city has five patch units that are operable. By the end of the year, he said, there will be six.
Some outdated vehicles and equipment presently on hand will be traded in for the new machines, bringing the number of vehicles to six by year’s end, Bevens said.
Of the five machines currently in use, the city has four patch trucks and one “patch unit,” which Bevens described as a high-tech injection system pulled behind a pickup truck on a trailer.
City street crews have been busy patching potholes as they have occurred this winter but have had difficulty keeping up because of the large number of snowfalls and the freezing and thawing that followed.
“I remember some really bad potholes in the past,” Bevens said. “But this year, we are at a critical point.”
City Councilman Jeff Preisner has proposed shifting $2.6 million the city has designated for other projects this year to repairing Topeka’s streets. The council will consider the proposal Tuesday.
Bevens said the acquisition of new patch units already has been included in 2007 and 2008 budgets and isn’t contingent on council action to shift additional money into street repair.
