ACT Research and FTR Associates expect March Class 8 net orders to be below February

Data published this week by ACT Research, a provider of data and analysis for trucks and other commercial vehicles, and freight transportation forecasting firm and consultancy FTR Associates suggests that preliminary data for Class 8 trucks in March is down from February.

ACT reported that preliminary net orders in March for heavy-duty Class 8 vehicles in North American markets will come in around 20,000 units. This is below February’s 22,366 units, which was slightly below its original estimate of 22,400.

ACT’s final numbers will be released in mid-April. The firm said that preliminary Class 8 orders are 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.

“We believe all of the Class 8 OEMs started building their 2013 model year equipment if not sometime during February then by March 1,” said Kenny Vieth, ACT president and senior analyst, in an interview. “We have seen some god 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. 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.

“I think retail sales numbers in the U.S. grew above replacement levels—with a monthly replacement level by our estimates being about 16,000 per month—and in October we rose above replacement levels of sales for the first time in this cycle,” he said. “A lot of this had to do with fleets working off pent-up demand which is not the same as adding capacity but they are finally getting out from under trucks they drove an extra year or two longer than they should have. We are running above replacement levels right now for orders for production for sales for the last four or five months. This helps to replace some of the really old trucks in the market right now.”

FTR Associates reported that its preliminary data for March Class 8 trucks indicated that net orders in March—at 19,682—were 11 percent below February and 32 percent below March 2011.