Isuzu Commercial Truck of America (ICTA) and Isuzu Commercial Truck of Canada set a combined all-time Isuzu brand sales record in the U.S. and Canada, the best since 1984 when the brand entered the North American market.
With key economic indicators conducive to medium-duty truck sales, such as new construction and the growth in online sales, pointing in a positive direction, the prospects for 2018 are bullish.
In 2017, Isuzu launched the FTR, its new Class 6 truck, filling a hole in its product lineup. At the 2018 Work Truck Show, the FTR was named Work Truck magazine’s 2018 Medium-Duty Truck of the Year. The 2018 Isuzu FTR, rated at 25,950-pounds GVWR, is available in one powerplant configuration, a 5.2L four-cylinder engine with an Allison six-speed transmission.
In 2018, ICTA debuted a crew cab version of its Class 5 NRR that can carry up to seven passengers. The NRR Crew Cab has a 19,500-pound GVWR.
To learn more about ICTA product plans and market strategy, Work Truck (WT) interviewed Shaun Skinner, president of Isuzu Commercial Truck of America and Isuzu Commercial Truck of Canada.
WT: Congratulations on a third consecutive year of record growth. To what do you attribute this growth?
SKINNER: As you mentioned, in 2017, we set a combined all-time Isuzu brand record in the U.S. and Canada, the best since 1984 when we started doing business here.
We not only established a high water mark for Isuzu truck sales we also set an all-time parts sales record in 2017 which is a great indication of strong service and parts business for our dealer body. This is a healthy sign.
The growth we are experiencing can be attributed to several things. First, the market, in general, is very healthy. Construction, manufacturing, the final mile, etc. are all helping to drive growth in the medium-duty segment. Second, we have a good breadth of product that allows our dealers to better meet customer needs. Our cab-forward N-Series product offers gas or diesel power, crew cab or standard cab and we have expanded our lineup to include the Class 6 cab-forward FTR. Third, we continue to offer strong programs and high level of support to our dealers with a focus on our lifecycle business model.
WT: Is there a possibility that there could be a fourth consecutive year of growth?
SKINNER: We’re hoping. So far, 2018 is looking to be a very good year. All indications are the economy will continue to do well. When we look at the medium-duty arena over the past several years, there’s no denying the fact that we’ve got some great tailwinds.
First, we’re being helped along by a very good market — that’s important. Next, if you look at our product lineup in 2017, we expanded it with the addition of the FTR, our new Class 6 truck, which helps us appeal to a segment of the market where we haven’t been able to do so since the 2009-2010 time frame, when we lost our Class 6 and 7 products.
We’ve been able to have great success in the parcel delivery market. We continue to grow our N-Series business, particularly our gasoline N-Series — that segment of the market continues to see good growth. We’ve been able to hold our own with our diesel products even though there is now more competition in the low cab forward diesel segment.
The old adage goes, it’s going to cost you a lot more to generate a new customer than maintain the one you already have. So one of the things we want to ensure our dealers are doing, and that we’re working with them on, is staying in close contact with everybody who owns an Isuzu product. I’m not just saying from a sales point of view. We’re also encouraging our service and parts business teams to stay in contact with existing customers. A satisfied service customer is far more likely to give you a chance to sell a new truck to them. If you want to get into more specifics, I think we have done a better job in working with our field force and our dealers in identifying who our customers are and getting out in front of them. We are maintaining a good level of contact with not only our current customers but also those who we see as prospective customers and new vocational areas we can attack.
WT: Are sales for the new FTR Class 6 tracking with your internal projections?
SKINNER: Sales with the FTR started in May 2017 and our dealers took close to 1,000 units into inventory from May to December of last year. We ended up selling close to 400 retail, which wasn’t too far off plan since we had a later start on production. As of today, the results for the FTR have been good, but we know there’s more room to grow it.
We’re very pleased with the sales of the four-cylinder-equipped FTR which, along with Freightliner, is the first four-cylinder entry in the Class 6 segment. I would say probably 90-95% of our customers have been very satisfied with the performance of the four-cylinder FTR. When you look at it from a fuel economy perspective, 100% of the people have been very satisfied.
The vast majority of fleets utilizing the FTR have been pleased with the low cab forward design that allows for the bigger body on a smaller footprint for use in urban environments, which provides better fuel economy and performance. We continue to have high expectations and a high level of confidence that we should be able to meet our goals. In 2018, our goal is to sell about 2,000 F-Series trucks.
This year, we announced a new crew cab version of our Class 5 NRR that can carry up to seven passengers. The NRR Crew Cab has a 19,500-pound GVW and is now our largest crew cab. Previously, it was the NQR Crew Cab, which is just below 18,000 pounds GVW.
WT: The construction industry is an important segment for Isuzu products. What is your assessment of the state of the construction industry in the U.S.?
SKINNER: We are seeing continued growth in construction, with all of the indicators for the future appearing to be very good. With construction growing, so too are all of the things associated with it, such as the delivery of new furniture as more new homes are built, along with all of the other things that revolve around the construction industry.
Infrastructure spending, while just a fraction of what’s required, still represents a huge amount of money that will be spent, which will influence the purchase of medium-duty trucks.
Another factor that bodes well for medium-duty truck sales is the way people are now purchasing goods. This is changing dramatically. Although brick-and-mortar stores will continue to be the primary source for the foreseeable future, the amount of goods that are being ordered online for home delivery continues to increase at a dramatic rate. This is changing the way products are distributed, which plays very well in the medium-duty segment.
All these factors when combined together provide a positive overall view of how the business will look for the future, as long as the economy continues to have consistency, which most are forecasting.
WT: Have you noticed any changes in the buying inclinations of medium-duty truck customers? You mentioned increased receptivity to the gasoline engine and to smaller displacement engines, are there other trends emerging among medium-duty truck buyers?
SKINNER: That’s a really good question. It seems we’re in the throes of trends that we can easily see within our portfolio. There is a quicker growth rate on the gasoline-powered vehicles versus the diesel-powered vehicles, but we are seeing some return back to diesel.
From a platform point of view, we’re not seeing any incremental large shifts. There was a point in time that we would have felt there would have been more of a move to alternative fuels, such as natural gas or propane. I think all of us were kind of leaning forward out over our skis waiting for that to happen. While there’s been some of that, I don’t think it’s occurred at the level that we had expected.
I also think we’re in a period of time where we’re trying to better assess the potential of EVs. We have some early adopters or those who are innovators. Most are larger fleets that are more sophisticated. Today, you don’t have many smaller customers who are asking about EVs. I don’t know that you have a large amount of market demand yet for EVs, but I think we’re starting to see interest, and questions about where we are going to be in the future. People are looking toward EVs as maybe the next generation of vehicles in North America, particularly the U.S. and Canada.
I don’t know that I could tell you we’re seeing other trends, outside of the desire to lower the cost of ownership. Every customer is always going to be interested in anything you can do to drive cost out of the operation of a vehicle. And, as time wears on we’ll have more of that.
One area that we believe that we’re well suited to take advantage of is population trends and continued growth in population within the urban environment. Those metropolitan areas with a million people or more are the areas where people are moving. It isn’t the smaller outlying areas.
Our design of truck will continue to become more and more popular because it’s built for an urban application. It is very strong in that environment, it has better visibility, better turning radius, and a larger body on a smaller footprint, which is really critical to many fleets.
We see an increasing evolution toward that type of product because it is more advantageous to those market areas that are going to sustain the most growth in the future, namely the major metropolitan areas.
WT: What trends do you see in terms of service lives of medium-duty trucks? Are your customers extending the service lives of their trucks?
SKINNER: Definitely. We are seeing the average age of a vehicle increase as we find ways to engineer more quality into them, and as the cost of the truck goes up, fleets are going to look for it to last a longer period of time.
WT: Are there any changes with your upfitting partners in terms of the types of products or services being offered?
SKINNER: We have two major national upfitting partners, Supreme and Morgan. We offer road-ready programs through them for our dealers to take advantage of. If customers need a vehicle that is ready to go, we have it there for them.
We continually work with both Morgan and Supreme to improve how their bodies are engineered to our chassis. In addition to Supreme and Morgan, there is a multitude of other body companies with whom our dealers also have relationships and provide their products to fleet customers.
As with most body companies, Morgan and Supreme are constantly looking at ways to lightweight their bodies to increase payload capacities for the customer. They’re also looking to serve the final-mile customer by evolving body designs to meet their needs. As the final mile market continues to grow, they are also building custom bodies specific to those market needs.
WT: Which are Isuzu’s strongest vocational markets and which new vocational markets are you targeting?
SKINNER: I don’t want to telegraph too much about our future plans. But the areas where we’re really good is any type of city delivery, whether it be dry goods using a dry freight van, or refrigerated foods because our trucks are great for a reefer application. In short, a great vocation for us is any type of inner-city delivery, whether it be dry freight or refrigerated goods.
We also do well in unique applications, such as airport ground-support equipment. You’ll see a lot of Isuzu trucks at airports. It makes great sense to use our trucks in this congested work environment because of their maneuverability and better driver visibility due to the low-cab-forward design.
Landscaping has always been a great business for us. I would say the grocery delivery segment is an area where we are always looking at ways we can expand because it’s an area we do well in.
As for the other areas that we’re looking at that are new and different for us, I’m cautious about talking about new vocational markets, but we are always looking at opportunities that we believe we would be well suited for, but just have never had a chance to really crack into them.
Your question earlier in the interview concerning bodies was a good one. I don’t want to give a lot of detail, but we’re working with a number of the body companies to look at some of these highly targeted vocational areas. I can say that we are looking to do a better job of building a body for our vehicle that allows for that industry or vocation to experience cost savings, whether it be driver efficiency, or employee efficiency through using that, or an overall decrease in the cost of ownership.
We can better match what their needs are with the right size of truck because we have a varying level of trucks, starting at a gasoline truck starting at 12,000 pounds, a gas at 14,500 pounds, and our diesel starting at 13,000 pounds that goes all the way up to 19,500 pounds with the N-Series.
Another area where we’ve had some limited success is the beverage industry. Some companies are changing the way they’re distributing their goods, and because of this — our trucks are now becoming a better fit for them. We’re also looking at industries that are evolving in a different direction, and how our products might better meet their changing business requirements.