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A familiar script for Mack: Orders up, market share down in third quarter


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Jon Harris, The Morning Call  /  October 19, 2018

Orders continued to fly in at Mack Trucks during the third quarter, but supply constraints again hurt the manufacturer’s ability to gain market share in a hot North American market.

Mack took in 7,456 orders in North America during the quarter, up 22 percent from 6,108 a year earlier, according to a report released Friday by Mack’s parent company, the Sweden-based Volvo Group. In terms of completed trucks, Mack delivered 5,526 vehicles in North America in the third quarter, up 20 percent from 4,624 in the same period in 2017.

Despite those double-digit gains, Mack’s market share in North America — a region responsible for more than 90 percent of Mack’s business — dropped from 7.7 percent to 6.6 percent over the past year. The company’s market share also decreased in the first quarter (8.9 percent to 6.5 percent) and the second quarter (8.2 percent to 6.9 percent).

“Mack Trucks has been hampered by supply constraints following the transition into its new range during the spring, which is why Mack’s heavy-duty market share declined to 6.6%,” Volvo wrote in the report.

Volvo assembles its Mack heavy-duty rigs at a Lower Macungie Township plant, which employs about 2,400 workers who earlier this year started building the company’s new highway truck called Anthem — a new product enabling Mack to seriously compete in the long-haul market for the first time in a long time.

“While Mack continues to do well in our core segments, our overall market share has been impacted by two main factors: supply chain issues facing the entire industry and the fact that we ramped up our new highway product during one of the hottest highway markets in recent memory,” Mack spokesman Christopher Heffner said in an email. “Now that we’ve worked through the ramp, our teams are fully focused on managing supply chain issues and we expect our market share will grow.”

In the meantime, Mack continues to lag behind its sister company, Volvo Trucks, in the North American market.

For example, right before Volvo explained in the report why Mack’s market share dropped, the company said Volvo Trucks’ share increased from 8.6 percent to 10.5 percent in North America over the past year. Volvo Trucks also has brought on new products over the last year: the refined VNX model meant for logging and heavy-equipment transport, and the redesigned long-haul VNL series truck.

Further, the order increases Volvo Trucks is experiencing in North America continue to dwarf Mack’s figures.

Volvo Trucks took in 18,311 orders in North America during the third quarter, up 211 percent from 5,896 a year earlier. Delivery-wise, Volvo Trucks sent out 7,955 completed trucks in North America during the quarter, up 57 percent from 5,076 last year.

While there will inevitably be a correction downward in the cyclical heavy-duty truck market, times remain good for now — giving Mack more time to grow its market share in North America.

With strong demand for freight and a shortage of transport capacity, freight rates have increased and boosted orders for highway trucks, Volvo has said. The company reiterated its forecast of 300,000 new heavy-duty truck registrations in North America this year, up significantly from about 244,000 last year. In 2019, the company is projecting an increase to 310,000, the report notes.

“We see fairly robust demand for the Mack products for at least a few more quarters to come,” Mack President Martin Weissburg told reporters in August at the Mack Customer Center in Allentown.

Issue on the horizon?

Shares of Volvo Group declined Tuesday, after the company announced that it had detected an emissions control component in some of its vehicles was degrading more quickly than anticipated, which could cause engines to exceed emissions limits for nitrogen oxides. The company said the cost to correct the issue with the part, which comes from an unidentified outside supplier, “could be material.”

While it’s early, Volvo did say the largest volume of potentially affected engines has been sold in North America and Europe — the company’s two largest markets.

Asked whether any Mack vehicles may be affected, Volvo spokesman Claes Eliasson wrote in an email: “That is too soon to say. We are still evaluating the scope of this. The investigation so far indicates that the degradation does not seem to affect all vehicles and engines in the same way and to the same extent.”

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Mack’s market share in North America — a region responsible for more than 90 percent of Mack’s business — dropped from 7.7 percent to 6.6 percent over the past year. The company’s market share also decreased in the first quarter (8.9 percent to 6.5 percent) and the second quarter (8.2 percent to 6.9 percent)

90 percent of Mack brand business is in North America because:

(a) Volvo Group wants to promote Volvo brand trucks in most global markets and;

(b) The Mack brand portfolio, aside from Australia, doesn't have purpose-designed trucks for the global markets. 

It's hard to sell a North American spec truck in most global markets, and then there's little to no after-sales support.

What's ironic is America's Ford Motor Company offers a full range of purpose-designed global market heavy trucks, but Sweden's Mack brand does not.

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