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Class 8 Vehicles


JEast
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I was speaking with a top salesman in heavy duty trucks at a super bowl party and he indicated that Class 8 vehicles are the oldest they have every been.  Normal turnover for vehicles is 4-6 years and the average age in North America is now over 8 years.  Any comments on any value plays in the space from parts companies to emission controls.

 

Cheers

JEast

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I believe Freightliner is the leader, but it's a subsidiary of Daimler. Navistar has class 8, but is diversified into buses and military vehicles.

 

 

From WIKI...Freightliner Trucks is an American manufacturer of heavy duty trucks, chassis and semi-trailer trucks in the United States. The company was founded as Freightliner Inc in 1942 and is now a division of Daimler Trucks North America, a subsidiary of the German Daimler AG.[1] The company is known mainly for the heavy duty class 8 diesel trucks it produces, as well as classes 5-7 trucks.

As of 2005, Freightliner is the largest manufacturer of heavy duty trucks in North America with annual revenue of over $32 billion (2012 est.) and over 24,000 employees (including Detroit Diesel). Because Freightliner LLC is a wholly owned subsidiary of Daimler, a non-American corporation, it is not included in Fortune 500 rankings. It is comparable to the 125th largest company in those rankings based on the criteria used.

 

 

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I was speaking with a top salesman in heavy duty trucks at a super bowl party and he indicated that Class 8 vehicles are the oldest they have every been.  Normal turnover for vehicles is 4-6 years and the average age in North America is now over 8 years.  Any comments on any value plays in the space from parts companies to emission controls.

 

Cheers

JEast

 

After speeping on it, the view of normal turnover that some people state is kind of flawed.  Both for person and business related vehicles.  Sure the average age of a vehicle currently is higher then years past.  One should keep in mind that in years past included vehicles that were not as well made.  Meaning they had higher maintence cost.  This changed in the late 90's by vehicles being made better.  While growing up 100k was pretty much the end of a car.  Now people can expect 200k miles out of a car.  With the price of new cars these days would not be suprised if people stretch their vehicle out as long as possible. 

 

2001 with 190x miles bought in 2003.  It has been in the shop for repairs a total of 5 times.  This would have been unheard of in the early 90's.  (just my experience).

 

I think Class 8's would have a similar experience with the history of their reliability.

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I would tend to agree on the age perspective as the average car on the road today is near 11-12 years when the average for turnover used to be 8-10 years.  Of course both people and businesses are putting off capital expenditures that they used to fund, but have for now been going the repair route -- see ORLY, AZO and others.

 

I would suspect that momentum may change in 2-3 years and reason to start looking now.  PCAR and CMI are surely the cream and reason they are at 3x book currently.  Had my eye on Williams Controls but they were just recently bought out.  ShahKhezri - thanks for the RUSHA idea.

 

Cheers

JEast

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ACW - accuride. I own it, and it's been painful - i was cleary early to this party. However, the company is improving. Winning new business - finally. Selling off some non-core divisions. A hedge fund recently announced a 14% stake. They just put one of their guys on the B of D. Another fund owns a 6% stake. ACW directly serves the class 7 and 8 market.

 

ACW is no Cummings or Paccar, it's definately an average ( maybe a below average  ;) ) business, but it's cheap.

 

 

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