Waiting too long to buy that next truck could prove to be very expensive.
Financial analysts, bankers and brokers expect slow economic growth to persist through the remainder of 2008, thanks largely to the credit crunch and the stalled housing market. Gloomy economic reports aside, 2008 could be the best time in the next few years to buy that new truck before price increases hit in 2010.
Two years from now, diesel engines will become more expensive and more complex because they will require new pollution control systems to meet stricter government rules. An executive from one engine company executive recently said the federally mandated emissions control equipment could add $2,500 to the cost of a new diesel-powered truck.
Facing a certain price increase for new trucks could be enough to push hesitant buyers into the market now, even as the economy cools. However, uncertain economic trends often make small-business owners “stingy with capital expenditures” like new trucks, says Ken Kremar, capital goods and freight transportation analyst at Waltham, Mass.-based Global Insight.
Market-research firms like Global Insight and others predict introduction of the new diesels could create a large surge in truck buying late this year and throughout 2009. By buying before Jan. 1, 2010, owners can avoid the added cost and complexity of new clean-air technology.
Freight haulers appear to be taking advantage of the slow economic times ahead of the new engine introductions in 2010 by beginning to order new trucks now. According to Transport Topics, a weekly newspaper in the commercial trucking industry, orders for new commercial trucks were up in the last three months of 2007. The increases were the first since truck sales dropped last year, with some categories falling like a rock.
One of the few bright economic spots in 2008 is the economic stimulus package, which should help distributors, contractors and other companies in the electrical market, according to Mark Fritcha, corporate sales manager at Stoops Freightliner in Indianapolis and Ft. Wayne, Ind. The stimulus package, he said, can provide “additional tax-depreciation benefits for small business owners that purchase vehicles in 2008.”
Fritcha's dealerships offer commercial trucks ranging from the Freightliner Sprinter commercial utility vehicle in a variety of cargo-hauling and passenger-toting configurations up to heavy-duty tractors for 18-wheelers.
Slower economic growth and the cooler business climate also give electrical companies some opportunities to focus on areas of their business other than upcoming jobs. Fritcha said business owners should call their local commercial truck dealers now, because it's an excellent time to review costs, when they are not under the gun of a business growth period.
But if an economic slowdown in the United States makes you question plans to replace an aging truck or to add another vehicle, Fritcha says renting another truck can keep your business running and protect it from further economic slow-downs. His dealership offers a rental fleet that includes Freightliner Sprinter cargo vans and 15-foot box trucks with liftgates and ramps. Rental terms that allow renters to return trucks with little or no notice make it easy to eliminate unneeded expenses or to replace the rental with a new truck, he added.
Despite different mind-sets between owners of small and large companies, Kremar and Fritcha said both types of owners should consider new truck purchases sooner rather than later because of the effect 2010 diesel engines will have on the market. Truck makers should be able to turn out enough vehicles to keep pace with demand in 2008. But all bets are off for 2009, when strong truck sales should make availability tight.