Class 8 and medium-duty orders made strong showings in December, according to preliminary data analysis, though medium-duty demand overall is declining, noted Michael Baudendistel, vice president with the Stifel Transportation & Logistics Research Group.
Yet Baudendistel stressed that, for now at least, Stifel is maintaining its 2017 projections for 230,000 Class 8 and 230,000 Class 5-7 medium-duty units.
“Fall order season closed out with December orders which were slightly above expectations, though still supportive of current 2017 production outlooks and not likely to lead to any significant change in estimates, in our view,” he explained in a research note this week.
“Overall, we believe total orders for the month [of December] should be viewed as in line with relatively low expectations, with Class 8 slightly outperforming and Class 5-7 slightly underperforming expectations,” Baudendistel pointed out. “[It’s] perhaps encouraging that demand has not deteriorated any further.”
Kenny Vieth, president and senior analyst with ACT Research, noted that demand for Class 8 units ended 2016 “on a positive note” with 21,400 units booked in December; the only month in 2016 in which orders rose above 20,000 units,
However, year-over-year comparisons were negative, Vieth said, as Class 8 orders are down 24% in December 2016 compared to the same month in 2015.
By contrast, medium duty Class 5-7 orders climbed to an eight-month high of 20,600 units back in December, he noted, though for all of 2016, medium-duty orders of 228,500 units were “a virtual carbon-copy” of 2015’s net order intake, giving up 1.1% compared to 2015, he said.
Stifel’s Baudendistel, though, noted that medium duty orders “have now declined for five consecutive months” and that following weak orders in November last (down 9% compared to November 2015), his firm reduced its 2017 medium-duty production estimate to 230,000 units from 235,000 units.
“We are maintaining that forecast for now, though we believe persistent weakness in orders indicates there remains pressure to the downside on our recently-lowered forecast,” he added.
That being said, Don Ake, vice president of commercial vehicles at research firm FTR, believes that Class 8 orders in particular “have been following stable, traditional, patterns for six months now,” and based on fourth quarter 2016 order volumes “should begin a modest recovery in February.”
He added that the most recent economic news has been positive, so freight demand should keep truck orders propped up for a few more months.
“[Though] 2017 still looks to be a tough year, backlogs are [now] growing and that means the worst should be behind us for now,” Ake said.
