March Class 8 Orders Take Anticipated Sharp Drop With Backlog Extended

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Transport Topics  /  April 2, 2019

North American Class 8 orders in March fell sharply compared with a year earlier amid continuing, but slower, economic and freight growth, and a heavy backlog, analysts said.

One analyst pegged the preliminary number at 15,700, which it will revise later in the month.

That was 66% lower than a year earlier when orders were 49,600.

“Even though demand is a shadow of its former self, slowing order intake belies current conditions. Admittedly, economic and freight growth are slowing, but both are still growing. And in the context of retreat from record levels, it is no wonder truck buyers continue to pursue incremental profits, as evidenced by the number of unbuilt units in the backlog,” he said.

Another analyst said truck makers’ backlogs were full through year-end.

“Looking ahead, orders are unlikely to materially change in the coming months,” Credit Suisse analyst Jamie Cook wrote in a note.

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With build slots scarce, Class 8 orders continue to slow

Josh Fisher, Fleet Owner  /  April 3, 2019

Although the economy and freight growth appear to be slowing, OEM line rates have not been impacted yet.

Class 8 tractor orders continue to be sluggish compared to last year’s boom, according to two research firms that track heavy-duty truck sales.

Demand is still strong, but supply is limited with all of the choice build slots for 2019 filled. Fleets that need trucks are basically taking whatever is available. Backlogs are rapidly declining, as the market tries to rebalance and establish some semblance of normality.

FTR reported this week that preliminary North American Class 8 orders for March was at 15,200 units, remaining below the 20,000 threshold for the third consecutive month. March 2019 was the lowest March for orders since 2010, according to FTR. March orders were 8% below February and down 67% year-over-year.

Class 8 orders for the past 12 months have now totaled 397,000 units, according to FTR.

Another analyst is tracking slightly higher numbers for March, showing the industry booked 15,700 Class 8 units in March. That is a 6.7% drop compared to it’s February numbers. The March numbers are still preliminary. The analyst’s March numbers are down 66% year-over-year.

“March marks the fourth consecutive month of orders meaningfully below the current rate of build. Over that four-month period, Class 8 orders have been booked at a 194,000 SAAR, compared to a 489,000 SAAR for the same period a year ago,” he said.

“Even though demeand is a shadow of its former self, slowing order intake belies current conditions,” he added. “Admittedly, economic and freight growth are slowing, but both are still growing. And in the context of retreat from record levels, it is no wonder truck buyers continue to pursue incremental profits, as evidenced by the number of unbuilt units in the backlog.”

Don Ake, FTR vice president of commercial vehicles, also noted these extraordinary market conditions. “Most fleets ordered well in advance of their need for trucks in 2019,” he said this week. “OEM production slots were scarce in 2018 and supplier constraints caused disruptions in supply, so fleets didn’t want to get shutout this year. Now so many build slots have been reserved, fleets that are currently placing orders for delivery this year don’t have many options.”

Although the economy and freight growth appear to be slowing, OEM line rates have not been impacted yet, Anke said. “Fleets are still putting more trucks in service and competing in a still decent freight market. It is expected that Class 8 sales will moderate sometime before the end of the year, as industry capacity begins to catch up with the freight surge that began in 2018.”

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Truck orders fail to hit 20k units for third straight month

Jason Cannon, Commercial Carrier Journal (CCJ)  /  April 3, 2019

North American Class 8 truck orders hit 15,200 units in March, according to FTR – the third consecutive month with order activity below 20,000 trucks.

March 2019 was the lowest March order total since 2010, was 8 percent below February and down 67 year-over-year.

Another analyst said March marks the fourth consecutive month with orders falling meaningfully below the current rate of build.

“Over that four-month period, Class 8 orders have been booked at a 194,000 SAAR, (seasonally adjusted annual rate) compared to a 489k SAAR for the same period a year ago,”

“These are extraordinary market conditions. Most fleets ordered well in advance of their need for trucks in 2019,” adds Don Ake, FTR vice president of commercial vehicles. “OEM production slots were scarce in 2018 and supplier constraints caused disruptions in supply, so fleets didn’t want to get shutout this year. Now so many build slots have been reserved, fleets that are currently placing orders for delivery this year don’t have many options.”

Class 8 orders for the past 12 months have now totaled 397,000 units.

Truck demand is still strong, but with all choice build slots filled for this year, Ake says fleets that need trucks are basically taking whatever is available. Backlogs are also rapidly declining as the market tries to rebalance and establish some semblance of normality.

“Even though the economy and freight growth appear to be slowing, it has not impacted OEM line rates as of yet,” Ake says. “Fleets are still putting more trucks in service and competing in a still decent freight market. It is expected that Class 8 sales will moderate sometime before the end of the year, as industry capacity begins to catch up with the freight surge that began in 2018.”

Even though demand is a shadow of its 2018 self, one analyst said slowing order intake masks current conditions.

“Admittedly, economic and freight growth are slowing, but both are still growing,” he said. “And in the context of retreat from record levels, it is no wonder truck buyers continue to pursue incremental profits, as evidenced by the number of unbuilt units in the backlog.”