An increase in June Class 8 total net orders for all the major North American OEMs is a welcome sign that the heavy-duty truck market may be stabilizing. But don’t uncork the champagne just yet, as it remains to be seen whether this is the start of a small yet sustainable run of rising sales or just a one-time bounce.
According to preliminary data gathered by research firm FTR Associates, Class 8 total net orders for all major North American OEMs – including orders for the U.S., Canada, Mexico and exports – totaled 8,101 units in June. That’s an increase of 9.7% from May and marks the first improvement in three months.
Though the 8,101 trucks ordered in June represents a 52.7% decline vs. orders for the same month last year, FTR said it moves the annualized rate of orders up to 97,212 – an improvement over the past three-month annualized rate of 94,872 units.
“The only concern I have right now is where these orders are going to be placed,” Eric Starks, FTR president, told FleetOwner. “If they are spread out equally over the next several months, that’s good. If they are all being placed in the last fourth quarter, that means we’re probably going to see a weaker third quarter this year for orders and would suggest a tough first quarter for orders in 2010. That’s not good.”
That being said, Starks believes the numbers indicate a “leveling off” from the major drops in orders and sales experienced by the industry in the first few months of 2009. “June’s increase is a welcome sign that the heavy-duty market continues to stabilize, although at very low levels,” he noted. “We expect to see additional slow improvement through the end of the year. But meaningful increases in equipment purchases will necessarily await higher freight demand – and we do not foresee more freight moving for some time yet.”
Still, OEMs and dealers see the June figures as a sign – however slight – that things are improving and thus not getting worse.
“Demand at this point for heavy trucks remains weak, but rather than a continuing decline we think there are indications of a leveling out,” Kevin Flaherty, senior vp-sales & marketing for Mack Trucks, told FleetOwner.
“There’s no question the market is at a low level,” Flaherty added. “February marked the lowest point in the last 25 years in terms of U.S. Class 8 retail sales, and May was the third worst one-month result dating back to 1985. But the fact that May was a 4.4% improvement from April is consistent about the market finding a bottom.”
“We’re definitely seeing more quote activity and some small sales,” said Kyle Treadway, president of West Valley City, UT-based dealership Kenworth Sales Co. and chairman of the American Truck Dealers association. “So business is growing a little bit, but not by leaps and bounds.”
Treadway – whose company operates 18 dealerships in Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming – also told FleetOwner that part of the jump in orders and sales, however small, is due to a rapidly aging truck population.
“From what I am hearing, the average age of [over-the-road] equipment is now 7.5 years and rising – and maintenance costs climb significantly as a truck gets order,” Treadway said. “That may be why we’re seeing orders and sales increase at this point.”