A crisis of confidence among buyers of trucks on credit is “at the root” of the three-month downturn in order activity for Class 8 trucks, according to Kenny Vieth, president & senior analyst of ACT Research.
Vieth stated that despite “an environment that should support healthy demand,” confidence in the trucking market has been shaken for these buyers by several factors.
“If the pullback in orders was freight-related, we would have expected to see a run-up in cancellation activity, which has not been the case,” wrote Vieth in the most recent issue of ACT research’s State of the Industry report. “This suggests to us that the problems with demand are not systemic.
“Smaller truckers who have to borrow to buy are most likely driving older trucks with relatively low values,” he continued. “Those truckers need to borrow $90,000 to $100,000 to finance a new truck. But their confidence has been shaken by a number of events in early 2012, including economic concerns, a 9.5% jump in fuel prices through Q1, and inconsistent freight early in the year.”
But looking ahead, Vieth pointed out that a “continuation of reasonable freight growth, healthy trucker profits, and rising used truck prices are expected to support Class 8 demand once the current period of uncertainty is worked through.”
ACT Research is a publisher of new and used commercial vehicle (CV) industry data, market analysis and forecasting services for the North American market as well as the U.S. tractor-trailer market and the China CV market.