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Articulated Hauler Market
Leaps Ahead, But Why?
CHARLES R. YENGST IS
Interesting things happen in the machinery market and sometimes they are just not explainable. This
past year, for example, the market for
articulated haulers made a significant
recovery from two previously dismal
years. Sales in North America jumped
over 50% for 2011, which cannot be
easily attributed to any significant boost
in business activity on any front.
Contractors were not coming out of the
woodwork to buy these very expensive
machines, as there is scant work for them
to do. The only real buyers were the rental
equipment people — loading up on haulers even if there was very little work to be
done. For those customers who do need
a truck, they’d rather rent than buy, since
the projects they are working on are short
lived or temporary at best.
The phenomenon of the “artic market
explosion” remains a mystery without
much to back it up. The U.S. Department of the Treasury changing the tax
code to allow accelerated tax depreciation on capital expenditures (to stimulate
business) and some clever accounting
helped to move machines when the real
demand for the products was quite low.
It’s worked, at least in selling artics. The
question is whether or not this speed-up
to buy machines will have an impact on
future sales, particularly if construction
continues to languish.
Some have suggested that the
change in engine emissions standards
has also had something to do with the
sales increase, and perhaps it has.
Emissions levels for artics coming off
the production line in 2011 already had
to have the cleaner Tier 4 interim engine
technology. If dealers had a significant
inventory of unsold Tier 3 machines
from 2009 and 2010, it’s possible that
discounted pricing on the older inventory could have eliminated the number
of machines that were available.
This brings us to the current year and
the question of whether or not sales
will be affected by past stimulus and
incentive programs. Demand has not
changed from last year, and the incentives to buy early (based on emissions)
will be missing. We still have a stimulus
factor with a partial change in depreciation charges from 2011, but who needs
it other than a few contractors who have
ongoing contracts? What this means is
that there could be a letdown after the
“fabulous recovery” of 2011.
As far as the artic suppliers, not much
has changed. Four companies still dominate articulated hauler sales. Caterpillar has a big lead, followed by Volvo,
Komatsu and John Deere. Together
these suppliers account for roughly 90%
of total industry sales annually. Terex
continues to be a good supplier as well,
and Doosan Moxy, Hydrema and JCB
round out the roster of players in North
America. Case offered artics for a number of years, importing machines from
Italy, but their imports have fallen off
during the past two years and they apparently are no longer in the business.
The U.S. market is still the biggest region for sales annually, accounting for
roughly 86% of all sales in North America. Canadian sales used to be below
10% each year, but have come up in recent years closer to the 14 to 15% mark.
As for size breakdowns, sales are
heavily falling in the greater than 35 met-
ric ton carrying capacity range, jumping
to more than 50% of total sales in recent
years, up from the 30% range five years
ago. Ten years ago, sales were bunched
in the 25 to 30 ton category. I might add
that with a more vibrant economy, sales
of smaller artics rated below 20 tons also
have a niche in the marketplace.