ACT Research data shows the industry booked 10,900 units in August, up nearly 6 percent from July, but 79 percent below last August’s best-ever order month. FTR’s estimation was slightly lower at 10,400 units, a 4 percent month over month increase but 80 percent below last August.
FTR notes Class 8 orders have fallen into a narrow range since May, averaging 11,000 units a month during that period. OEMs have built through much of the backlog created by the record orders in 2018 and FTR reports fleets are in no hurry to start ordering for 2020, as there are expected to be ample build slots available and no component part shortages.
The company says it is possible the market will return to normal order cycles at some point in the fourth quarter.
“The Class 8 market is at a turning point. The huge orders in 2018 supported the robust production last year and through much of 2019. Now the economy has slowed and there are enough trucks to handle the available freight growth. OEMs are cutting production rates, eventually down to near replacement demand levels,” says Don Ake, FTR vice president commercial vehicles.
“Weak freight market and rate conditions and a still-large Class 8 backlog continue to bedevil new Class 8 order traffic. Though, with OEMs opening their new model-year order books, order weakness is increasingly the story of an overcapacitized Class 8 fleet, as truckers start to make their plans for 2020,” adds Kenny Vieth, ACT president and senior analyst. “August is typically a weak order month. Seasonal adjustment boosts the month’s intake to 12,500 units, a narrower 2.8 percent month-to-month improvement.”
FTR adds Class 8 orders for the past 12 months have totaled 298,000 units.
“There is a tremendous amount of uncertainty in the economy right now due to tariffs and the trade war with China,” Ake adds. “Businesses are holding back on capital investment and our industry is no exception. Fleets are going to be cautious about buying new equipment in the short term. We do expect orders to increase in October. However, if freight growth is still muted and manufacturing sluggish, the big fleets may just place orders for Q1 and take a wait and see approach.”
In the medium-duty space, ACT Research reports Class 5-7 preliminary net orders were 18,800 units in August, up 10 percent from July but down 22 percent year over year.
“If the weakness in the Class 8 market is a reflection of broad softness in freight-intensive economic sectors, the modest downturn in Classes 5-7 order activity is more reflective of the still-healthy consumer economy in much of North America. Though, after a seven-year positive run and some inventory building, the medium-duty [market] is looking increasingly tired,” says Vieth.