Can You Pre-Buy? Don't Count On It
Federal regulators didn't heed the economic impact when they punished diesel manufacturers.
DOUG CONDRA
EDITORIAL DIRECTOR/PUBLISHER
Pre-buy. In recent weeks it's been the buzz-word among fleets wary of upcoming diesel engines with exhaust gas recirculation -- and among manufacturers who'd like to see a steady, spikeless truck sales recovery.
The fleets have definitely gotten the word: Federal emissions standards mean most U.S.-built heavy truck diesels must have EGR systems starting in October.
Some fleet managers are suspicious of the newly altered engines because (a) they will reportedly add $3,000 to $5,000 to the truck's price; (b) testing has been rushed because the Environmental Protection Agency moved the deadline up by 15 months; (c) there are durability and maintenance concerns.
And your diesel options are going to be limited after October 1. Truck manufacturers have announced that certain engine makes and/or models will not be available in their trucks after the deadline (see Hotline, page 24).
Schneider National's Don Schneider has been leading a charge for EPA to back off on its deadline and give the industry more time for testing the engines. But that doesn't look likely.
The four engine manufacturers with EGR powerplants (Cummins, Detroit Diesel, Mack and Volvo) have voiced confidence in their fuel economy and durability. They have pointed out that testing in fleets is well underway, and the new engines will have completed several months of testing by October.
So what does one do when one's fleet needs more trucks? If you want to avoid acquiring an early generation EGR engine, there are three obvious options:
1. Gut it out. Keep the trucks you have longer.
2. Go for the old. Buy used equipment.
3. Pre-buy new. Order in time to beat the October deadline.
Some truck and component manufacturers predicted that pre-buying would be very minor. New truck order boards have in fact picked up, perhaps in part because of a recovering economy. But from what fleets are telling us, at least some of that uptick is pre-buying.
One major fleet has compacted 15 months of its regular new tractor order schedule into the time remaining before October. After that, it will hold off buying more until it's satisfied the new engines have been proven.
Another said he'll stay with his buying schedule of two tractors a month until the deadline, then stop buying and run his existing equipment longer. And Schneider, calling the situation "the single biggest issue trucking has faced in 10 years," has indicated he will buy some used tractors.
If you're looking at pre-buying as a solution and haven't moved on it, your window of opportunity is already pretty well closed. Truck manufacturers are close to having their pre-10/02 production sold out. Because of that, your best pre-buy solution is probably from dealer inventories, while they last.
It remains to be seen if new truck sales -- and therefore truck manufacturing -- will tank in the fourth quarter. If they do, it'll be one more blow to the economy.
It's too bad the EPA regulators didn't more seriously consider that impact when they meted out punishment for our diesel engine builders.
