Analysts are now expecting a “modest upturn: for Class 8 truck orders this year as February orders hit 23,200 units according to ACT Research and 22,900 units according to FTR.
Those numbers are up 28% versus February 2016, noted Kenny Vieth, ACT’s president and senior analyst; only the third positive year-over-year comparison, and the largest one at that, in the past two years.
“Weak orders in 2016 and an improving economy should make positive year to year comparisons a monthly occurrence as we move through 2017,” he added.
“February was another very encouraging month for Class 8 truck orders. Orders have increased for four straight months, indicating the market is making a solid recovery after the second-half slump in 2016,” added Don Ake, FTR’s vice president of commercial vehicles.
He said preliminary Class 8 net orders for February hit 22,900 units, according to FTR’s data, exceeding expectations for the second month in a row with orders up 5% from January and 28% from February 2016.
This “steady order trend” has now pushed Class 8 production backlogs to over 100,000 units for the first time since June 2016, Ake pointed out.
“This order cycle is much flatter and longer than usual, but this is a healthy order total for a February,” he added. “March orders may not decline that much. This is what a turning point looks like.”
Though Michael Baudendistel, vice president of the transportation & logistics research group at Stifel Capital Markets, is more cautious concerning the outlook for heavy truck production, he noted in a recent research note that the trends are strong enough for the firm to revise their production forecasts upward.
“On their own, Class 8 orders of 23,200 units [in February] do not excite, being below the average 24,615 units ordered per month in the prior six years,” he said. “But, given February orders represented the third consecutive month that has exceeded our expectations – with orders continuing to build sequentially despite general seasonal patterns that would indicate a modest decline – the orders are enough of an impetus for us to increase our 2017 production outlook.”
Stifel is boosting its 2017 Class 8 production estimate from 200,000 units to 215,000 units to “better reflect” year-to-date strength in orders and is also raising its 2018 production outlook as well from 230,000 to 245,000 units.
“Freight is starting to pick again after sagging some in 2016. Rates are climbing and fleets are feeling much more confident about business going forward,” added FTR’s AKE. “Truck builds and sales should now begin a modest upturn which should continue throughout this year.”
