NEW YORK.  Although Mack Trucks is revising its 2016 forecast for North American retail Class 8 truck sales downward to 240,000 units, signs “look much brighter” for a return to higher levels in the first half of 2017, according to company president Dennis Slagle.

Strong sales levels in the first part of 2015 led to some overproduction and higher dealer inventories that created “a small bubble that needed to be corrected,” he said at a press conference.  “The bottom line was that there were just too many trucks in the pipeline.”

Initial expectations were that the bubble would correct by the middle of this year, but a number of factors including lower used truck prices, softening freight demand and overall high consumer inventory levels that did not come down during the Christmas season slowed that correction, Slagle said.

“I’m more encouraged lately as we’re seeing full employment, we’re seeing record levels in stock markets,” he said. “I think we’ll start seeing consumer spending again carry the day and start to clear off those shelves and restocking start to generate truck activity,” he said.

Among the optimistic signs for “at least the beginning of a return to normal” in 2017 is the beginning of a reduction in dealer inventory levels across the industry, according to Slagle.

Like other truck manufacturers, Mack has reduced production rates in response to the lower sales, which it will achieve through “down weeks” rather than production line reductions or layoffs, Slagle said.

Mack has had a relatively good first half of the year based on the strength of vocational markets, which are a core market for the company.  “We’re still seeing some favorable dynamics in construction around the country and the body companies are busy delivering vehicles.,” Slagle said.  “That of course is one of our sweet spots, so we feel pretty good about that side of our business.”

Turning from truck sales to service, Slagle said company research shows that OEM dealers are currently only providing 15% of heavy-duty truck service with independent shops providing another 10 to 15% and customers doing the bulk of the work. 

Calling dealer service capacity “woefully underutilized,” he said greater reliance on proprietary components and increased complexity from advanced emissions systems will eventually move much of that service work back to dealerships if it will provide customers with better truck uptime. “However customers will not let go control of that uptime until we prove that we can improve it,” Slagle said.

In preparation for that shift, Mack dealers over the last four years have added 40% more service bays and increased technicians by 90%, including a 250% increase in the number of certified master mechanics.

Launched in January, the Mack Certified Uptime Center program has already qualified 39 dealer locations and expects to have 60 by the end of the year, according to John Walsh, VP of global marketing and brand management. Early results from those locations show the industry average of four days for dealer repairs has been cut in half, he said, pointing out that Mack intends to eventually certify all 430 of its dealer locations.