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Bellwether - Truck Market 
Peter Schmidt | Editor

Published: Fri, 21st October 2016 15:17:14 GMT

Volov trucks 2016 European Truck Market Future

Open quote signThe difference between the car and commercial vehicle market couldn’t really be bigger. Unlike a shiny, brand-new private car, which, for its proud owner start losing money the day it is first parked on the owner’s home driveway, the trucks acquired by haulage or construction companies for example are acquired to generate profits from day one.

While the vast majority of new cars purchased or leased will do precious little for say 22 out of every 24 hours, long-haul trucks, like aeroplanes, will stay on the move for a large chunk of any 24 hour period. Without sufficient work, due to a lull in the haulage business, these laid-off or underutilized trucks, like most privately operated cars, will be transformed into fast-depreciating assets.

So it goes without saying that prime purchase/lease decisions in the truck business are driven by just one compelling reason: The ability to make an acceptable profit during truck ownership. This in turn is driven by current and future demand for freight. Broad brush, in a fiercely competitive market, excess truck capacity will drive down average haulage rates, depressing truck operator income.

 The converse, a shortage of haulage capacity, thanks to a lasting sharp pickup in economic activity, will drive up haulage rates. Ultimately, that’s likely to tempt operators to add extra trucks to their fleet. 

No surprise then that Europe’s truck market, buffeted by the steepest and longest economic downturn in post-war history, has taken a severe hammering. Scarred of the experience of plummeting demand for road haulage since 2008, Europe’s truckers shunned all thoughts of investing in new truck haulage capacity. So as demand grew again, thanks to a better than feared pickup in European economic activity, the road haulage industry began to run into a shortage of supply. This in turn meant higher potential profits for the trade. In a near classical cyclical pattern, over the past couple or so years the next inevitible stage has come round again – ordering of new trucks. Barring exceptions like a looming change in truck industry related legislation, say the obligatory switch to Euro 6 trucks, underlying demand for heavy trucks is widely seen as forward indicator of likely future economic prosperity. 

Like white goods sales, considered a bellwether of consumer confidence, as barometers of sentiment go, Europe’s heavy truck market provides a pretty good reading of current and short-term forward economic activity. So what are we to make of this morning’s West Europe’s September heavy truck sales?

September saw the 21st successive month of unbroken heavy truck sales growth in Western Europe. 

However, while the UK’s September heavy truck sales took a more than one-third plunge, pulling down single-handedly September’s overall regional growth to just 2.2 per cent, the majority of West Europe’s remaining markets saw yet another month of double-digit heavy truck sales expansion. 

If you don't include the UK’s dire September numbers, same month heavy truck sales in Western Europe grew by a still healthy looking 13.3 per cent and 14.2 per cent for the year to date.

Just like the proverb “Red sky at night, shepherd's delight”, there is precious little scientific foundation to this year’s still satisfactory heavy truck sales outlook. Mercedes for one is now expecting between 5 to 10 per cent overall market growth in this year’s European Medium- and heavy-duty truck market. 

And yet, the fact that in Europe underlying demand for heavy trucks is still growing, doesn’t necessarily point to cloudless blue skies on Europe’s economic horizon, but for the autoindustry at least, it is, nevertheless, greatly soothing and comforting
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