Trucking news: ACT notes Class 8 vehicle production and orders are on the upswing
June 14, 2010
Citing a strengthening North American economy and improving supply/demand balance of freight hauling truck capacity, ACT Research recently said that a continuing rebound of orders and production of commercial vehicles is underway.
The provider of data and analysis for trucks and other commercial vehicles said in its ACT North American Commercial Vehicle Outlook that its 2010 forecast for Class 8 vehicle production was increased by 4,500 units. This brings to total projection to 146,000 units, according to ACT Partner and Senior Analyst Kenny Vieth. Despite the increase, Vieth told LM that a typical unit replacement figure is about 200,000.
“The good news is the forecast is going up and also that even though the forecast is going up it is still well below replacement levels for equipment so capacity continues to bleed out of the market, with incremental improvement in demand,” said Vieth.
Even though demand is improving, the current situation is still not a case of carriers asking for “as many trucks as you can build me right now,” Vieth explained. But he did say this may be coming in the next four-to-six months.
What’s more, Vieth said there have been modest upside surprises on orders in the last three months, which has been encouraging from an equipment perspective.
“What has been nice from an equipment perspective is the strength of demand has hit in all north American markets—in the U.S., Canada, and Mexico and up across equipment types so we have seen orders for tractors with and without sleepers going up,” said Vieth. “We have seen an increase in day cab trucks, and it is kind of everything being just a little bit better than it was.”
While production levels for Class 8 trucks are below replacement levels, Vieth said there continues to be an upward trend in used truck pricing. And over the past six months, he said ACT has seen a $5,000 increase in the six-month run rate it tracks over the past six months. ACT expects an increase of another $5,000 over the next three-to-five months.
“With the improvement in the economy, coupled with the falloff in used truck pricing, it creates a very good dynamic for used truck pricing from a used truck supply perspective,” said Vieth. “And we still have relatively low sales so there are not a lot of trade-ins coming into the market. The big carriers have spent the last three years taking capacity out of fleets, so even thought they have been buying new trucks they have been creating used trucks. I think the big carriers are no longer shedding capacity so that avenue of supply is going away. And we are still seeing reasonably decent exports of used trucks coming out of the U.S., because used truck prices are still low.”
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