Housing then, becomes the third lid
on improving medium-duty demand.
medium-duty trucks are tied to utilities
and small businesses serving consumers, especially their homes. Every new
home gets visits from the plumber, roofers, framers, electricians, etc., nearly all
of whom drive medium-duty vehicles.
Even existing home sales drive medium-duty demand through local moves, upgraded appliances and renovations.
An accompanying graph highlights
how closely the medium-duty vehicle
demand tracks the housing market. It
took almost a year for Class 5-7 sales
to fall after the decline in new home
sales, while the rebound appears to
be only one to two quarters slower.
The problem, from a medium-duty
demand perspective, is that the recovery in the housing market continues to
falter. Despite extremely low interest
rates, there are serious headwinds to
improving current trends.
-30%
-20%
-10%
0%
10%
20%
30%
40%
down debt, but debt load is still
elevated.
• Employment is weak, with more
of the same expected for coming
quarters.
•With little equity in current
homes, the ability to trade up is
greatly diminished.
Kawasaki.qxp 4/29/09 10:03 AM Page 1
• Consumers have shifted to paying
New Home Sales vs. Cl 5-7 Truck Sales
Y/ Y Change of SAAR
-60%
-50%
-40%
Jan-Feb’05
Sept-Oct’06
July-Aug’05
May-June’06
July-Aug’06
Nov-Dec’06
M ar-Apr’07
Mar-Apr’05
Sept-Oct’05
Nov-Dec’05
Mar-Apr’06
Jan-Feb’07
May-June’07
July-Aug’07
Sept-Oct’07
May-June’05
Jan-Feb’06
Source: ACT Research Co., LLC, US DOC Census Bureau
Nov-Dec’09
Nov-Dec’07
Jan-Feb’08
May-June’08
Mar-Apr’08
M ay-Ju ne’ 10
July-Aug’08
July-A ug’09
Jan-Feb’ 10
M a y-Ju n e ’0 9
Sept-Oct’08
Nov-Dec’08
Jan-Feb’09
M ar-Apr’09
Sept-Oct’09
M ar-A pr’ 1 0
Class 5-7 production is expected
to improve each year over the next
five years. However, growth will be
much more measured as a variety of
economic headwinds unrelated to the
freight industry continue to constrain
demand. dp
