ACT Research Co. LLC sees the latest preliminary figures on net orders for Class 8 trucks as indicative of continued softness while FTR Associates views them as sluggish. ACT added that preliminary net orders for Class 5-7 trucks are also down.
ACT explained that while its preliminary Class 8 numbers for May are “still soft,” they were up from actual numbers in April. ACT’s final numbers, which will be released in mid-June, will approach 18,000 units for Class 8 trucks and 13,100 for Class 5-7 vehicles.
FTR’s preliminary data puts May’s Class 8 net orders at 17,650 units, which the research firm called “a modest upturn after four months of decline.” FTR final data for May will be available later in the month.
According to FTR, May orders were only up 5% from a weak April and down a “hefty” 24% from the same month last year. The annualized order numbers for the past three-month period, including May, now calculate to 216,700 units.
FTR added that that performance is significantly lower than the activity seen in the December through February timeframe, when order activity was running at a 308,000 annualized rate.
“As has been the case the past two months, the [softening] issue appears to center on credit-buying truckers’ confidence in the economy relative to the risk of taking out a sizeable loan,” remarked Kenny Vieth, ACT’s president & senior analyst.
“Highlighting the notion that the recent pullback in orders is a confidence rather than a freight-related issue, cancellations in recent months have remained at low levels,” he continued. “Beyond confidence, the demand ‘check boxes’ remain positive, suggesting that the pullback [in orders] is temporary.
“The net orders for May were in-line with our modest expectations,” related FTR president Eric Starks. “Unfortunately, it is well below where many in the industry were expecting to be at this point in time in the recovery.
“The ongoing weakness is putting additional pressure on the OEMs to lower their build rates over the next several months,” he continued. “With orders hovering near 17,000 units per month and production near 25,000 units per month, it is clear there is a disconnect. A dramatic increase in order activity is needed in order for the OEMs to continue production at their current pace.
Starks also pointed out that “It is important to note that even with the recent slowing in order activity, the levels are still relatively healthy for the industry.”
“Over the next few months we expect orders to remain near current levels, as the summer is traditionally a slower time of the year for order activity,” he noted.
“Of course,” ACT’s Vieth added, “we are approaching the period of the year that is associated with order weakness.July and August are typically the softest order months of the year.”