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Strong economy, $60 oil driving truck sales, Peterbilt says

Posted: February 15, 2018 by John G. Smith

Peterbilt general manager Kyle Quinn

SCOTTSDALE, Ariz. – Peterbilt is projecting sales of Class 8 trucks in Canada and the U.S. to reach between 235,000 and 265,000 units this year, with another 85,000 medium-duty trucks to be sold on top of that.

Several economic conditions back the healthy projections.

During a media briefing, general manager Kyle Quinn referred to the U.S. Gross Domestic Product expanding by more than 2.5%, business investment that’s up 4% since 2016, a strong manufacturing environment, and growing motor vehicle sales. Unemployment is low, and recent changes in U.S. tax laws will create new opportunities for customers, he said. “All in all, a very healthy environment.”

Specific to trucking, freight tonnage is at record levels, driven by multiple industries and e-commerce activity, he added.

Crude oil prices above $60 per barrel are making a difference of their own.

“We started to see a little bit of strength last year,” Quinn said, referring to oilfield-related investments. “We’ve seen strength return in the Canadian oil patch, the Midwest oil patch, and even some in Pennsylvania.” It has led smaller oil service fleets to begin adding trucks as they prepare for idled production to return. “Anything north of $60 per barrel is healthy,” he said of the economic conditions that drive truck sales. “Many of our energy customers are getting ready for growth, but some of that growth has already arrived.”

Last year was already “great” for Peterbilt itself, which produced more than 43,000 vehicles, and for the fourth year in a row added 25 new dealer locations, said Quinn.

The company says its share of the Class 8 heavy-duty market reached a record 15.3% in 2017, up from a previous record of 14%. Meanwhile, Peterbilt notes that it also holds 20% of the market for vocational trucks and 30% of refuse vehicles.

Still, recent truck sales have focused more on updating existing fleets rather than adding capacity.

“The majority of what we’ve seen recently say in the last two quarters have been focused on replacements,” Quinn said, noting how a driver shortage is “keeping a lid” on outright expansion. “If [fleets] could acquire new drivers and bring them in, they would expand. Some are expanding, but it’s a small percentage of their total fleet.”

Among the trucks being sold, an increasing share of buyers are also opting of proprietary power. Paccar MX engines are now found in 43% of the new trucks that roll off the Peterbilt assembly line. Quinn also referred to 2017 as “the year of the Paccar transmission,” referring to the recently introduced 12-speed automated design, which boasts features such as 1.2-million-kilometer oil change intervals.

“We’ve seen steady growth of adoption through 2017, and we expect that momentum to continue to grow this year,” he said of the proprietary powertrain.

The company itself has completed a $100-million expansion at its manufacturing facility in Denton, Texas, adding features such as 17 new dock doors, an automated storage and retrieval system for painted parts, and 100,000 square feet to prepare vehicles for delivery.

That location recently produced Peterbilt’s millionth truck – a model that will be presented at the upcoming Mid-America Trucking Show to the winner of a Super Fan contest.

“This will be a powerful moment for the red oval,” Quinn said, noting the company’s presence at the annual trade show will focus on appealing to owner-operators and brand enthusiasts.

Meanwhile, medium-duty models continue to be produced in Ste. Therese, Que., while a Mexicali plant builds Model 220 and 520 trucks. Paccar’s engine plant in Columbus, Mississippi, handles machining and assembly alike.

There’s clearly new technology to come. Peterbilt’s demonstrations of autonomous docking and platooning are already underway, and chief engineer Scott Newhouse expects customer trials in the next couple of years.

Looking to the future, a Paccar innovation center in California’s famed Silicon Valley is working on advanced driver assistance systems ranging from adaptive cruise control to lane departure warnings, blind spot monitoring, platooning, autonomous docking, and autonomous driving. Sixteen electric trucks are currently being tested in LA County, including the M520 refuse vehicle and M579 drayage vehicle.

Just don’t expect all of it right away.

“It’ll be a while. It’s hard to define ‘a while’, but I do think there’s a tremendous opportunity in the near term,” Quinn says, referring to autonomous features that can improve safety and reduce the burden on drivers. Adaptive cruise systems to handle stop-and-go traffic is a year away, and lane-keeping assistance should come next year, he said. “Over a period of time, we’ll add and combine more systems and features.”

“We’ll see something very similar to the aerospace industry, a kind of autopilot with the driver watching,” he predicted.

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