In The News

Truck Dealers Expect Caution in Truck-Buying This Year

When it comes to truck buying, uncertainty and caution are the watchwords for 2013, according to some of the nation's top truck dealers, but a tax break passed as part of the recent "fiscal cliff" deal should lend a helping hand.

We spoke with some of the nominees for the American Truck Dealers/Heavy Duty Trucking Truck Dealer of the Year award about their expectations for sales this year.

"What we're thinking for this coming year is the customers will be cautious," says Drew Linn, president and dealer principal of Southland International Trucks in Homewood, Ala. "I'm cautiously optimistic that they will purchase trucks, but not in the numbers that I would have thought maybe six months ago," thanks to lingering concerns about the economy.

"The challenge I see is uncertainty," says Brad Wilson, president of Sioux City Truck Sales, a four-dealership group in Sioux City, Iowa. "Customers just don't have enough confidence to make major investments. There's a lot of rebuilding of trucks rather than buying new."

He notes that glider kit building, nearly non-existent not that many years ago, is now becoming common.

"Our customers are still being very conservative," says Sheila Horwith, CEO of Horwith Trucks, a Freightliner and Western Star single-location dealer in Northampton, Pa., whose rural market consists of mostly smaller fleets.

"They are waiting to see what happens after the election, they're trying to watch their budgeting very tightly. We saw orders pick up a little bit last year and they are talking about this year they will start adding some more."

Because of the economic uncertainty of the past few years, she says, as well as concern over 2010 emissions technology, many customers have let their fleets age. "Now they're at a point where they don't have much option but to start updating," and concerns about the 2010 products are largely going away.

Depreciation Deal

The tax bill that kept the nation from going over a fiscal cliff allows fleets to deduct 50% of the cost of new trucks and other equipment in 2013. Called bonus depreciation, the measure is designed to help the manufacturing sector recover from the recession.

In 2011, the stimulus measure allowed a 100% deduction for equipment purchases in the same year the purchases were made. In 2012 the write-off was reduced to 50% and would have expired on Dec. 31.

"It certainly will not hurt truck sales," says Scott Oliphant, president of Kenworth of South Louisiana. "I feel it will help soften the blow for business owners who otherwise would be facing far larger tax bills. Basically, if the decision is buy equipment to help improve or grow your business or pay more taxes, I suspect more often than not the business will invest in itself."

Linn notes that while early comments from a few customers indicate it is a good decision, it will not be the reason they purchase, but one customer said it may be a reason to slightly increase the number of units on an order.

Read more about the ATD/HDT Truck Dealer of the Year in a special supplement to the February issue of HDT .

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