ACT says Class 8 net orders up 320 percent in January
February 08, 2011
Keeping in line with the fourth quarter of 2010, preliminary net orders of heavy-duty Class 8 commercial vehicles for North America markets at 27,300 units were up 320 percent year-over-year in January, according to data from ACT Research, a provider of data and analysis for trucks and other commercial vehicles.
“After ending 2010 with three strong order months, the trend continued into January,” said Kenny Vieth, ACT president and senior analyst, in a statement. “Over the past three months, Class 8 orders have been booked at an annualized rate of 320,000 units. The uptick in orders continues to restock industry backlogs, setting the stage for significant production increases as we move through 2011.”
One primary reason for such a significant annual gain is because January 2010 was when the Environmental Protection Agency’s 2010 mandate for implementing federal emissions standards in heavy duty trucks. Trucks manufactured in January 2010 and beyond cost on average $8,000-to-$10,000 more than before these efforts went live. This resulted in a mini pre-buy towards the end of 2009, and in early 2010 there were not a lot of Class 8 truck purchases occurring.
In an interview with LM, Vieth said that truckers continue to universally say that they are not adding capacity. But he pointed out that there is a difference between adding capacity and getting capital expenditures back to where it needs to be.
“Generally, truckers have been at below maintenance level capex for the past two or three years,” said Vieth. “Ultimately, it is payback time, as trucks need to be replaced. In addition to the domestic side of the story, the order activity is broad-based, with all of the OEMs participating in all of the North American geographies and not just the U.S. Canada and Mexico are strong right now, as are non-NAFTA markets that are ordering trucks like crazy. It is broad-based, and we are seeing the same thing in the trailer market, with U.S. trailer orders being very robust over the past few months.”
Another factor influencing an increase in orders are increased freight volumes, coupled with truckers being profitable, and what Vieth described as the easing of credit conditions. And fleets are aging coupled with capex being neglected for a few years, which Vieth said has led to truckers having confidence that the recovery may be here to stay. He also said there is a belief that truckers can make capex investments without having to deal with another recession six months down the road.
Data from FTR Associates, a freight transportation consultancy were in line with ACT’s, showing that preliminary December Class 8 truck total net orders for all major North American OEM’s at 27,009 units were up 1 percent over December 2010 activity. FTR said this is “a marked improvement from the 6,400 units ordered one year earlier and is an increase of 324% from January 2010.” And the firm added that net order activity annualizes to 251,900 units over the last six months, and the prior three months alone at 319,500 Class 8 trucks and includes U.S., Canada, Mexico and Exports.
“Orders for January came in above expectations,” said FTR President Eric Starks in a statement. “We had anticipated that they would be close to 25,000 units. The continued strong order activity in January adds more fuel to the recovery in the commercial vehicle equipment sector. With the recent sustained higher levels of order activity, 2011 is shaping up to be a very good year especially relative to where we were in 2009.”
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