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NTEA Forecasts Favorable Climate for Commercial Truck Sales in 2005

October 5, 2004

Leading U.S. economists at the Sept. 22, 2004 National Truck Equipment Association (NTEA) Economic Outlook Conference (EOC) indicated that 2005 is gearing up to be a favorable year for the commercial truck and transportation equipment industry. Seven analysts shared economic forecasts with over 100 industry professionals in Dearborn, Mich. According to Mustafah Mohatarem, chief economist for General Motors Corp., the U.S. economy is performing well and is near full employment, despite the shocks experienced in the past three years. He attributed the good economic performance in part to continually increasing productivity, timely increases in government spending, and good application of monetary policy by the Federal Reserve. In his forecast, Mohatarem indicated that the outlook for the U.S. economy in 2005 is rosy, but must be tempered as a result of the oil price spike and a large U.S. trade imbalance that threatens to drive down the value of the dollar. Eli Lustgarten, an analyst at J.B. Hanauer & Co., concurred that the outlook for the U.S. economy is favorable for 2005, and further indicated a similar outlook for 2006. In his end-use market review, Lustgarten stated that capital spending is likely to lead the continuation of the economic recovery in the second half of 2004 and on into 2005. He expects sales of medium-duty trucks (Classes 5–7) to increase from approximately 240,000 units in 2004 to 260,000 units in 2005. Ken Kremar, a principal at Global Insight’s Industry Forecast Practices Group, delivered a truck industry market forecast, in which he concurred with Lustgarten’s 2005 outlook for medium-duty trucks. Kremar indicated that sales would increase again in 2006 to about 280,000 units. He stated that production of Class 1–3 commercial trucks would increase from 2.85 million units in 2004 to 2.9 million units in 2005, and to 2.95 million units in 2006. In the heavy-duty segment of the market, Kremar forecasted that sales would increase from about 240,000 units in 2004 to about 300,000 in 2005, and grow further to 320,000 in 2006. Both Lustgarten and Kremar stated that they expect a heavy-duty truck pre-buy situation in 2006 as a result of diesel engine manufacturers responding to the new emissions regulations for 2007. The conference was rounded out with a construction industries forecast from Ken Simonson, chief economist of the Associated General Contractors of America; a telecommunications industry forecast from Ron Luginbill, an analyst with SBC Communications, Inc.; a courier industry forecast from Gene Huang, chief economist of FedEx Corporation; and a domestic and international truck market forecast from Stephen Latin-Kasper, director of market data and research for the NTEA.
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