Russian importers drive bargains with used US trucks

Russian importers drive bargains with used US trucks

By Bernard Simon

Published: March 28 2008 02:00 | Last updated: March 28 2008 02:00

Many of the giant trucks now hauling car parts, groceries and building materials across Russia were - until a few months ago - trundling along interstate highways in Texas and Ohio.

A glut of trucks in the US and the sliding dollar have encouraged a boom in exports of class 8 rigs, the biggest vehicles on the road, vividly underscoring the contrast between the faltering US economy and fast-growing emerging markets.

Russia and Mexico are the biggest buyers. Hundreds of used American trucks are also on the road in Nigeria, Vietnam and South Korea.

"The Russian truck importers pretty much came to us," says Henry Coberth, used truck manager at Atlanta-based Vanguard Truck Center, which operates five dealerships. "They were very aggressive about contacting dealers, especially Volvo dealers." A four-year-old Class 8 rig typically sells for $40,000-$45,000 (£20,000-£22,500).

Kenny Veith, economist at Indiana-based ACT Research, which tracks commercial vehicle data, estimates that the proportion of class 8 output exported from North America has grown from 2 per cent in 2002 to 14 per cent last year. According to US government data, 6,000 used trucks were shipped to Russia last year, double the number in 2006. But ACT and others suspect the actual number is far higher.

Besides a slowing economy, the US glut has been exacerbated by heavy "pre-buying" that took place ahead of tighter diesel emission regulations implemented in January 2007.

Class 8 sales in the US and Canada slid to 175,000 last year from 322,500 in 2006. "We ended up with too many trucks chasing too little freight just as the economy softened," Mr Veith said.

Hopes of a revival this year have dimmed, with the price of diesel fuel climbing above $4 a gallon, and many big shippers reporting difficult business conditions.

Chris Patterson, chief executive of Daimler Trucks' North American unit, forecasts little or no improvement from the second half of 2007. US January and February rig sales were 43 per cent lower than a year earlier.

Many Russian truck owners and drivers prefer North American vehicles to European ones. The North American rigs are more spacious, with bigger bunk beds for drivers. They are also easier to maintain. For instance, North American trucks typically use drum brakes, which are less complex than the disc brakes on European models.

Booming vehicle exports have opened doors for US parts suppliers too. ArvinMeritor, a Michigan-based maker of suspensions, axles and brakes, expects sales of after-market components in eastern Europe to reach $10m this year, from virtually nothing in 2005.

ArvinMeritor opened an office in Moscow this month and is thinking of building a plant in Russia. Several North American suppliers have set up joint ventures with Russian truckmakers.

Port congestion and bad weather have hampered exports in the past month or two. But Pete Monize, vice-president of Arrow Truck Sales in Kansas City, one of the biggest exporters and a Volvo subsidiary, is confident that trade will pick up again by mid-year.