TIC reports on first half truck sales

Phil Taylor, president of the TIC

The Truck Industry Council (TIC) has announced that total Australian truck sales for the first six months of 2012 were 14,342 units, or 7.8 percent above the modest 13,306 unit tally achieved for the same period in 2011.

Given that production rates and sales a year ago were negatively affected by natural disasters in both Japan and Australia, the 2012 achievement to June is not a strong vote of confidence in the economy by truck buyers.

While light and medium-duty sales are similar to those recorded last year, the 2012 truck tally is significantly bolstered by a heavy-duty segment that has exceeded 2011’s first half by 20.6 percent. To compare with results of a few years back, the 2012 first half is 405 units higher (up 2.9 percent) than the post-GFC 2009 first half. To keep perspective, however, the 2012 tally is still 21 percent lower than the 2008 first half result of 18,218 units.

The TIC considers the relative strength of the heavy-duty truck segment is a fair reflection of Australia’s ‘two-speed economy’ that has featured regularly in the media for the past few years.  In general terms, the majority of light and medium-duty trucks serve largely in the urban areas, while a significant proportion of heavy-duty trucks are purchased by players in the robust resources sector, especially in Queensland and Western Australia.

With interest rates falling in recent months, and predicted by many analysts to remain low for the second half of 2012, TIC considers the remainder of the year will continue to deliver truck sales at a higher rate than in 2011.  After a prolonged period over which all fleets, even those with sound financials, found it difficult to obtain credit for their new capital purchases, 2012 has seen lenders offer attractive finance to operators with a sound credit rating.  

The adjusted 2012 full year forecast for the total truck market (above 3500 kg GVM) is now 29,250 units, or five percent higher than last year.

Market segments

The June 2012 results show the relative strength of the heavy-duty sector, and to a lesser extent the medium-duty segment, are sufficient to offset relatively flat results for the remaining segments.

For instance, June sales of light-duty trucks were 17 percent lower than the same month last year, giving the sector a half year tally two units lower than for 2011. Only two of the 10 brands competing in this segment posted a sales increase for June 2012 over the same month in 2011.  This latest six month result is 200 units higher than the GFC-affected 2009, but is still 20 percent lower than the first half total for 2008. The outlook for light-duty sales over the remainder of 2012 is expected to be similar to that of 2011.

Meanwhile, the medium-duty element continues to show a slight reversal to its longer term trend of slow decline. The June 2012 total was just three units higher than for June 2011 (up 0.4 percent), and comparing first halves, the 2012 result is 5.4 percent higher than for 2011. It’s worth noting the latest half yearly medium-duty result is still almost 32 percent below the 4633 units posted for the same period in 2008, and 10 percent below the post-GFC 2009 figure.

In stark contrast, the heavy-duty sector made tremendous strides over the past 12 months, achieving successive quarterly gains of 31 and 20 percent in the second half of 2011. More recently, the first half 2012 tally of 5073 units is 20.6 percent higher than that period in 2011.  The easing of credit restrictions to customers with good credit ratings, combined with lower interest rates, has assisted this segment greatly. There will be keen interest in the 2012 second half numbers, given any gains will be on top of last year’s substantial growth. Having said that, a June result 19 percent higher than for June 2011 is not to be ignored. To compare with results of a few years back, the 2012 heavy-duty first half tally is 896 units higher (up 21.5 percent) than the post-GFC 2009 first half, but is still 14.6 percent lower than the 2008 first half result of 5942 units.

At the opposite end of the spectrum, the light-duty van segment has achieved a slight reversal to its decline that began several years ago. While 2011 recorded a full year total 15.7 percent less than in 2010, the recent results are very similar to last year. The 2012 first half showed 10 more units sold than the same period in 2011, for a total of 1816 units.  However, the June 2012 light-duty van total showed an increase of 6.6 percent over June 2011, indicating a slight recovery for this segment.

TIC president, Phil Taylor, is hopeful the second half of 2012 will reflect a resilient market.

“The 2012 first half Australian truck sales results reflect supply and demand slowly returning after the tumultuous events of the same period in 2011,” Taylor said. “Heavy-duty truck sales continue to climb relatively fast, while the other segments are flat or showing very small increases. 

“I believe uncertainties in the capital cities will continue to be reflected in relatively stable truck sales overall, while the resources sector and the improved conditions for capital finance will continue to drive a stronger heavy-duty segment, as well as some light and medium-duty sales.

“Australian truck suppliers and their customers will keep a close watch on both international and domestic economic conditions in the second half of 2012,” he added. “I anticipate a full year market that should be marginally higher than in 2011.”

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