A combination of factors – strong freight volumes, easement of credit, and rising used truck prices to name just a few – are boosting Class 8 truck orders and sales for the last quarter of 2010.
“All the planets are lining up,” Steve Tam, vp -commercial vehicle sector for ACT Research Co., told Fleet Owner.
ACT said October net orders of heavy-duty Class 8 commercial vehicles for North American markets totaled 18,914 units, up 24% month-over-month from September, with medium-duty Classes 5-7 net orders also gaining sequentially, posting 19% month-over-month growth.
Kenny Vieth, ACT’s president and senior analyst, added that Class 8 net orders this October were the second highest monthly total since April of 2008. Only a brief one month surge in October 2009 produced greater net orders, a surge brought on by carriers trying to get ahead of the Environmental Protection Agency (EPA) exhaust emission reduction mandate that raised the price of new heavy-duty vehicles by about $10,000 this year.
“While September gave a hint to increasing demand for Class 8 equipment, October orders provided the strongest sign yet that the transportation sector recognizes the need to replace aging equipment,” Vieth said. “With production of equipment rising only slightly in October, the order backlog is now 29% above its trough earlier this year, a sign that the commercial vehicle manufacturing sector is getting healthier.”
Ward’s Auto magazine reported that actual sales of commercial trucks continue to stay strong as well, with U.S. sales of medium- and heavy-duty trucks in October continuing their momentum from September with a 5.2% gain on like-2009 to 18,522 units. Year-to-date deliveries grew 10.8% in October, compared with year-ago, to 176,530 units, Ward’s added.
Sales of heavy-duty Class 8 trucks climbed 6.3% in October, largely on the back of Daimler’s Freightliner brand’s 49.8% spike, to 3,128 units after rising 16.7% in September. October inventories of Class 8 and medium-duty trucks declined in both units and days’ supply. Class 8 had a 68 days’ supply (22,032 units), down from 80 days (24,235) in the same month during 2009.
Jon Langenfeld, senior transportation analyst with investment firm Robert W. Baird & Co., noted in his monthly “Freight Flow” brief that truck cargo volumes continue to improve into the fourth quarter, albeit with some hitches.
The Baird Freight Index increased 5.9% year-over-year in October versus a 4.3% improvement in September, he said, with trends roughly consistent with average seasonal expectations. “Industry anecdotes suggest October was consistent with generally weaker volumes in September,” he added. “However, many contacts suggest volumes modestly improved into November through mid-month.”
“Those higher shipment volumes are key – that’s giving carriers the cash they need to buy new equipment,” Eric Starks, president of research firm FTR Associates, told Fleet Owner.
“While we’re not seeing a really rapid change in sales, order rates are definitely starting to trend higher,” he added. “However, we’re still calling our outlook ‘cautiously optimistic’ as the numbers are neither below nor above our expectations.”
“We’re definitely taking a step in the right direction” in terms of heavy truck orders,” said ACT’s Tam, but it’s only a step. “There are still some fleets holding their breath and waiting, so we’re still only at an inflection or transition point in terms of orders,” he stressed. “However, we’re still forecasting a sequential improvement in orders for the rest of this year.”
