While ACT Research Co. reported declines in Class 8 and Class 5-7 orders for September, with FTR Transportation Intelligence reporting a dip in Class 8 orders as well, neither indicated that those numbers are cause for concern – at least not yet.
“The year-over-year decline marked the sixth consecutive negative reading for Classes 5 through 8 orders,” noted Kenny Vieth, ACT’s president and senior analyst, in a statement.
“While we continue to believe that much of the order decline is a reflection of larger backlogs and tough comps, rather than any substantive change in demand, this has become a less compelling piece of evidence, as the spread in the year-over-year backlog has continued to narrow,” he stressed.
Don Ake, FTR’s VP of commercial vehicles actually emphasized that the market is returning to what he characterized as “remarkable level of consistency” after a period of “wild order activity” that began in October 2014 – though the firm predicted at its annual conference that truck and trailer sales will start declining overall next year.
“We don’t see the increased cancelation rate the past two months as being a cause for concern,” Ake noted in a statement. “The orders that were canceled were placed seven months or more prior to this, to hold production slots. So while the market is softening some with fleets now deciding they do not need these trucks, total backlogs remain strong.”
According to ACT’s numbers, North American Class 8 net orders dropped 3% from August to 19,600 units in September – which is 21% below September 2014. However, ACT’s Vieth stressed that because orders are typically soft in September, seasonal adjustment provides in actuality a “healthy boost,” raising the month’s seasonally adjusted order total to 23,100 units – or a total year Class 8 order volume of 277,200 units.
Also, Vieth stressed that North American Class 5 through 7 vehicle net orders rebounded to 21,100 units last month, up 18% from August and 8% from September 2014 for a total projected annual order volume of 246,000 units.
FTR’s calculations had North American Class 8 truck net orders in September falling just 0.4% to August, reaching at 19,460 units, though with higher anticipated cancelation rate for the second month in a row.
FTR’s Ake noted that “base” Class 8 order activity has been consistent for the past five months, though with “heavy ordering” occurring early during the last 12 month period, Class 8 orders are “annualizing” at 345,000 units – what the firm considers to be a “solid rate.”