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May North American Class 8 orders take a tumble

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May Class 8 orders were down a significant 70% from year-ago May. (Courtesy: DAIMLER TRUCKS NORTH AMERICA)

Preliminary North America Class 8 net order data released by the two commercial vehicle organizations that track information both show a sharp decline in Class 8 orders for May.

FTR reports preliminary Class 8 orders for May scraped the bottom of the order cycle, coming it a lowly 10,400 units, or 29% below the slow April activity.

This is the lowest volume for Class 8 orders since July 2016 and the weakest month of May since 2009, reflecting a minus 71% year-over-year comparison. Class 8 orders for the past 12 months now total 360,000 units.

ACT Research showed the OEM industry booked 10,800 units in May, dropping 27% from April, but down a more significant 70% from year-ago May.

FTR’s Don Ake, vice president of commercial vehicles said May 2019 is basically the final period for ordering trucks to be built in 2019 and the low numbers indicate that fleets are simply trying to find any scarce build slots left for the year.  Backlogs should fall to the 220,000 range, just where they were a year ago when the fervent ordering for 2019 began.

“May’s low orders were consistent with it being the last month in this year’s cycle. The 2019 order pattern was pulled ahead by three months, so May’s orders are similar to what you normally would see in August,” he said. “Ordering for 2020 is expected to begin in June, with several OEMs expected to start taking orders for next year.”

OEM build rates remain at robust levels, Ake said.

“The economy and freight growth are expected to ease throughout the year, applying some downward pressure on the truck market in the second half.  Orders for the next couple of months should be a good indicator of fleet confidence about 2020.”

“Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July 2016,” said Kenny Vieth, ACT’s president and senior analyst. “May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”

For more information on FTR visit ftrintel.com.

For more information on ACT Research, visit actresearch.net.

 

 

 

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July trailer sales up slightly, but below last year; used Class 8 sales fall again

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Both ACT Research and FTR reported trailer sales in July as being up slightly over June, but still far below the same month one year ago. (Courtesy: GREAT DANE)

The nation’s two organizations that track and analyze data about the commercial motor vehicle market both note that trailer orders were up in July as compared to June but were still far below when compared with the same month last year.

One of the two organizations reported used Class 8 sales fell for the fourth consecutive month.

ACT Research said preliminary estimate for July 2019 net trailer orders is 9,900 units. Final volume will be available later this month. This preliminary market estimate should be within +/- 3% of the final order tally.

FTR reported preliminary trailer orders for July at 9,000 units, up 61% from dismal June numbers but 68% below July 2018. FTR said trailer orders continue to show weakness during the summer months after experiencing a record run in the second half of last year, noting that van fleets already have their orders in for 2019 and have not started ordering yet for 2020. Although currently, production remains robust at near-record levels, some easing of build rates is expected as backlogs fall significantly to where they were at the start of 2018, FTR said. Trailer orders for the past 12 months now total 324,000 units.

“While net trailer order volume improved significantly from June’s dramatically disappointing results, the industry’s year-over-year performance continued to be extremely weak. While net orders jumped 65% versus an amazingly weak June, they were 66%  below this point last year, a tough comparison to the first month of the record-setting order run-up of last summer and fall,” said Frank Maly, ACT’s director of CV transportation analysis and research. “While some fleets made investment commitments in response to the opening of some 2020 order boards, their overall response was lackluster. A few months ago, there was strong interest to push commitments into next year, but uncertainty over the economy, freight volumes, and capacity has now caused many fleets to move to the sidelines as they re-assess their true needs for either replacement of older equipment or additions to fleet capacity next year.”

On a positive note, Maly said the cancellation pressures of recent months appeared to ease a bit in July. However, any cancels are likely impacting fourth quarter production slots, so there is still some churn in order board occurring before year-end.

“That results in a fairly soft foundation for early next year. Also worth noting is that production continued at a solid pace in July, although OEMs definitely slid back from June’s frantic pace,” he said.

Don Ake, FTR vice president of commercial vehicles, said trailer orders should stay subdued in August but start to revive in September, as fleets determine their needs for next year. The environment remains uncertain, with freight growth slowing and the tariff situation in flux.

“The July order volumes continue to demonstrate a possible return to normalcy in the equipment markets. The low total is representative of a typical slow summer order month, and is very close to the July 2016 number,” he said.

As for the used truck market, Steve Tam, ACT’s vice president of research, said preliminary used truck sales fell 2% month-over-month, the fourth consecutive sequential drop.

Other data released in ACT’s preliminary report included sequential comparisons for July 2019, which showed that average prices fell 4%, while average miles climbed 2%, and average age was up 4%.

“Used truck prices are the hottest topic in the industry right now,” Tam said. “Many dealers are experiencing significant softening in prices, but the erosion is not uniform. Depending on a host of factors, experiences vary and a few factors that impact prices include customer, equipment specifications, location, and vehicle condition.”

ACT’s Classes 3-8 Used Truck Report provides data on the average selling price, miles, and age based on a sample of industry data. In addition, the report provides the average selling price for top-selling Class 8 models for each of the major truck OEMs – Freightliner (Daimler); Kenworth and Peterbilt (Paccar); International (Navistar); and Volvo and Mack (Volvo).

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ACT Research: Key risk to CV market forecasts is China trade wars

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This chart showing the U.S. dollar to Chinese yen (RMB), illustrates why trade wars are neither good, nor easy to win, an ACT Research official said, (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — According to ACT Research’s (ACT) latest release of the North American Commercial Vehicle OUTLOOK, the key risk to all commercial vehicle market forecasts remains the on-again trade war with China.

“This month’s chart, the U.S. dollar to Chinese yuan (RMB) illustrates why trade wars are neither good, nor easy to win,” said Kenny Vieth, ACT’s president and senior analyst. “As can be seen, after the U.S. fired the latest salvo in the trade war on August 1, the Chinese responded with in-kind tariffs and a 3% currency devaluation — so far. Since the first ‘shots’ of the trade war were fired on March 1, 2018, the RMB has fallen 12% versus the U.S. dollar.

“So, tariffs imposed by the U.S. have been met with in-kind tariffs from China, and the Chinese government has allowed the yuan to devalue, thereby offsetting the U.S. tariff impact, while simultaneously making US goods even more expensive in China.”

Vieth said the bigger risk, especially to emerging economies is that in order to compete with China, they will have to devalue their currencies, making US goods more expensive in more countries and raising the risk of a deeper global downturn.

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

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ACT Research: Heavy duty markets at the edge of the precipice

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This graph by ACT Research shows freight growth will decline in 2020 and 2021 before accelerating in 2022, Class 8 truck productivity will remain in the negative through 2022 but will become less each year. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind.  – According to ACT Research’s latest release of the North American Commercial Vehicle OUTLOOK, current data and anecdotes make a strong case that the heavy-duty vehicle markets are at the edge of the precipice.

“Since the start of this demand up-cycle in late 2017, we have targeted this year’s third quarter as the point at which the industry was likely to see production rollover,” said Kenny Vieth, ACT’s president and senior analyst. “That targeting was largely derived from historical precedent, with historical peak-level build lasting between 13 and 15 months. For the current cycle, we date peak build rates to June 2018, so August represents the 15th month of peak-level production.”

Regarding heavy vehicle demand, Vieth said, “At the heart of our cycle duration prediction, carrier profitability and production peaks always lag the freight cycle, so capacity building always accelerates relative to freight growth at exactly the wrong time, every time.

“Large new inventories and deteriorating freight and rate conditions suggest erring on the side of caution remains the right call, and we are warning those in the industry to be prepared for down weeks starting as early as fourth quarter.”

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

 

 

 

 

 

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