ACT reports March Class 8 orders hit lowest volume since July 2011
April 23, 2012
ACT Research, a provider of data and analysis for trucks and other commercial vehicles, said that Class 8 new and net orders in March were the lowest they have been since July 2011.
March new orders and net orders hit 22,038 units and 20,025 units, respectively, according to ACT. ACT previously forecasted that its preliminary net orders for March would come in around 20,000 units. February net orders hit 22,366 units. When the preliminary orders were initially released, ACT said that the preliminary Class 8 orders were below expectations in what is typically one of the seasonally strongest months of the year, adding that on a seasonally-adjusted basis Class 8 orders are at its lowest point since hitting 18,400 units in September 2010.
“Class 8 demand, as expressed by incoming orders in February and March, has hit a soft patch,” said Kenny Vieth, president and senior analyst at ACT, in a statement. “There was a tax-driven prebuy at the end of 2011, and dealers added larger than seasonal stocks in Q1 ahead of rising model year ’13 new truck prices. For a lot of truckers, the gap between new and used prices remains particularly large. Given all of the above, plus rising diesel prices through Q1, it is not too hard to see why the industry has softened. However, we think a continuation of reasonable freight growth, strong trucker profits, and healthy used truck prices will push demand higher once the current period of uncertainty is worked through.”
Vieth said in a recent interview that ACT believes all of the Class 8 OEMs started building their 2013 model year equipment if not sometime during February then by March 1.
“We have seen some good inventory stocking over the last couple of months and part of that was dealers having a 2.5-to-3 percent price increase taking effect with 2013 model year Class 8 trucks,” he said. “And part of the strength in production in the last couple of months—and a big part of the inventory accumulation in January and February—was dealers stocking lower-priced model year 2012 trucks ahead of this price increase.”
An order placed in March typically results in a truck being built in July or August, said Vieth. This means that dealers ordered several trucks in the fourth quarter and took delivery of a bunch of stocked trucks in the first quarter, which he said likely means that dealers were not being as big of participants in the market in March as they were in previous months due to the price increase. Other reasons for the decline include higher diesel prices in 2012 and a drop-off in freight volumes at the beginning of the year, he noted.
Vieth also said that the North American trucking industry has been building Class 8 trucks at about an annual rate of 300,000 units.
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!