FTR reports August Class 8 truck net orders show improvement but are still sluggish

Preliminary data recently released by freight transportation forecasting firm FTR Associates indicated that August Class 8 truck net orders hit 15,593 units, marking a 27 percent jump from July.

Final August numbers will be available later this month as part of FTR’s North American Commercial Truck & Trailer Outlook service.

Even with the significant sequential gain, FTR said that August represents the second lowest order month for Class 8 trucks since August 2010. And it added that the annualized order numbers—for all North American OEMs—for the most recent three-month period trends out to 179,300 units, which it said is significantly below the same period a year ago. To put that figure into perspective, the annualized order number fro, December to February was 308,000.

“The August order numbers are where we expected them to be and validate our assumptions that production should ease over the next few quarters to come in line with demand,” said FTR President Eric Starks.”We are forecasting Q4 orders to fall below the current production levels.”

FTR Director of Transportation Analysis Jon Starks reiterated that point in a recent interview, explaining in an interview that while things are sluggish on the orders front, they are not necessarily bad.

One reason for this disconnect, said Jon Starks, is that there was way too much optimism on the OEM side.

“They got ahead of themselves and saw things going in one direction much too fast, so when we get to the back half of 2012 we think there is going to be a significant reduction coming in terms of what the OEMs are doing,” he explained.

Unless there is a strong surge in orders in the next few months, Jon Starks said it is very likely OEM production numbers are going to have to come down. He also noted that a “weak spell” for orders in 2011 carried over into 2012, with OEM’s requiring time to sort through the net effect of orders.

Given that situation, he said it stands to reason that Class 8 sales will be sluggish for the next few months.

“At the beginning of the year OEMS were producing well above what the sales environment was and had built out quite a bit of inventory on the production side,” said Jon Starks. “Sales did not drop off, though, instead they were more sluggish than anticipated.”