Note: This article was originally published on TopMark Funding’s blog in March 2020. Information may be outdated.
Mack Trucks and Volvo Group both announced on Friday that they were going to cease assembly operations due to the coronavirus.
“We have decided to temporarily suspend production as part of the effort to slow the spread of the virus in our communities.” Mary Beth Halprin, vice president of public relations, Volvo Group, said.
“During this suspension we will be exploring new ways of working and possible approaches to production that would allow for increased social distancing in the facility. The health and safety of our employees and communities will be our primary concern as we work to make the most informed decisions we can during this uncertain time.”
The news comes on the tails of announcements by General Motors, Fiat Chrysler, and Ford shutting down their production facilities. Mack and Volvo appear to be the first manufacturers of heavy duty trucks, however, to stop production in retaliation to the coronavirus epidemic.
Never Waste a Crisis
In a sardonic (cynically humourous) way, the coronavirus disaster could not have come at a greater time for Volvo, Mack, and trucking manufacturers in the United States. TopMark Funding predicted in mid-January that the production of new big rigs would stall (though not to this extent).
Used trucks are the big deal in 2020. In 2019, 24,000 trucks were put out of business and onto the market to be sold. This made things bleak for the companies that made and already sold those trucks. After all, why buy a 2020 Peterbilt when the average vehicle loses 9% of its value the instant it is no longer new?
Because of this competition from used commercial vehicles, the manufacturers have been feeling a squeeze on its sales and margins. Taking a break from building new heavy duty trucks and letting used ones exit the market could be a smart business decision to increase revenue later in the year. If it stops the spread of coronavirus, the shutdowns alleviates two problems at once.
Ever since President Trump announced a state of emergency regarding COVID-19, businesses across the nation have been closing up shop temporarily to curtail the spread of the disease. Truck drivers can mostly breathe a sigh of relief, however, as trucking as an industry is not only an essential business to keep stores running (and in some cases the virus has helped the trucking industry), but it also is a naturally isolating profession. The odds of a trucker catching novel coronavirus is slim, and even if they did, the odds they transmit it to another is also slim. Just make sure to use gloves when handling that diesel pump!