Vans and small trucks holding up as McMullan points to heavy incentives
The malaise overtaking heavy-duty truck sales is being overshadowed by solid performances at the lighter end of the commercial vehicle market, the Truck Industry Council (TIC) highlights.
The industry body notes that the market has split performance-wise, with heavy- and medium-duty trucks definitely in the slow lane.
“New Heavy Duty segment truck sales have been tracking at levels almost 25 per cent lower than sales in 2019 since March this year,” TIC notes in a commentary on the July sales result.
“While over the same period, Vans sales have only declined by 3 per cent and light-duty trucks sales were 4.7 per cent lower and both Light Duty segments posted record breaking sales for the month of June 2020.
“As we witnessed in the 2014 to 2016 period, it is the bottom end of the market, with Light Duty Vans and Trucks continuing to ‘hold up’ the overall market, while medium duty trucks wain and Heavy Duty Truck sales take a hammering. In fact, it is only the years following the Global Financial Crisis (GFC) where sales have been worse for heavy duty sector.
“Overall, the heavy vehicle sector is tracking 12.4 per cent down year-to-date, that is 2,744 less trucks sold this year than in 2019.”
Read about TIC’s call for a $450,000 asset write-off level, here
Light duty van sales are seen again as the “standout performer” in July with 550 sales, up 11.6 per cent, or 57 units, for the month over July 2019 results.
Year-to-date van sales are also solid with 3,559 delivered to the end of July, down just 3 per cent (-108 vehicles) over 2019. In total 3,559 vans have been delivered to the end of July 2020.
“The heavy-duty and, to a lesser extent, medium-duty truck sales continue retracting, no doubt suffering under the economic downturn and loss of business confidence as a result of the Covid-19 pandemic,” TIC CEO Tony McMullan says.
“Light duty truck and van sales continue to be better than expected and those results are likely in reaction to the $150,000 instant asset write-off financial incentive set in place by the federal government and now extended to the 31st of December 2020.
“The new truck sector is again heading toward a ‘two speed’ marketplace, as we saw from 2014, through to 2016, with solid sales in the lighter segments, while at the heavy end of the market, sales are slowing noticeably.
“On the surface the new truck market as a whole appears to be performing reasonably well, despite the current economic climate.
“However, when looking into the detail provided in the Truck Industry Council’s T-Mark sales data, heavy truck sales are suffering significantly.”
McMullan emphasises that there are further government financial incentives available to operators wishing to purchase a truck costing more than $150,000.
“I am specifically talking about the Covid-19 Accelerated Depreciation incentive that allows the purchaser of a truck priced over $150,000 to claim over 50 per cent of the new truck’s value back at tax time,” he says.
“I urge anyone considering a new truck purchase to contact their accountant for the best advice on these incentives.”