Class 8 Truck Orders Stumble Again in July

Employees at a Volvo Trucks North America facility work to assemble a Class 8 tractor. (Volvo Trucks North America)

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North American Class 8 truck orders hit their second straight month of year-over-year declines in July, according to ACT Research.

ACT preliminary data showed orders fell 13% to 13,400 units. They also experienced a drop of 8% from the previous month. The only other year-over-year declines so far this year occurred the previous month and in March. But when seasonal factors are taken into account, the numbers become more favorable.

“Class 8 orders remained at directionally and seasonally expected levels in July,” said Kenny Vieth, president and senior analyst at ACT. “Historically, July is the worst month of the year for Class 8 orders, so [it] is awarded the biggest seasonal factor, nearly 24% this year. Applying that seasonal factor boosts July’s seasonally adjusted intake to 17,500 units, which results in a narrower 3.7% [month-to-month] decline.”

Vieth added that the headwinds that have been buffeting the U.S. portion of the North America commercial vehicle industry did not diminish through the first half of the year. He even sees them as arguably a touch worse at the start of the second half.

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Vieth 

“Preliminary results of public TL carriers’ Q2 performance are only encouraging in the sense that the nominal results were up from Q1,” Vieth said. “To this we add surging and record-level inventories, in both the medium- and heavy-duty markets.”

Vieth noted that he has been repeatedly surprised to the upside on order activity given these factors. He believes that this recent data is similar to the prior month in the sense that orders were more closely aligned with data-driven expectations.

“While we’re seeing a cooling in tractor orders as a result of the weak freight market, customer demand for straight trucks remains solid,” said Jonathan Randall, president at Mack Trucks North America. “At Mack Trucks, we’re focused on supporting our customers through market fluctuations, with a full lineup of vehicles to meet their needs.”

FTR Transportation Intelligence issued a report that said Class 8 preliminary net orders for July came in at 12,400 units, down 6% month over month and 7% year over year. The report noted that orders are somewhat below seasonal expectations, with the market on a year-to-date basis now performing slightly below replacement demand levels.

“OEMs experienced a somewhat mixed market this month, with vocational markets mildly underperforming conventional, but the overall picture was steady,” said Dan Moyer, senior analyst of commercial vehicles at FTR. “Despite stagnant freight markets, fleets continue to invest in new equipment, albeit at a slowing pace.”

FTR also noted in the report that the decline is unsurprising given the strong order performance in the first five months of the year and the typically weak seasonal order period. Its data found that after averaging nearly 16,000 units from April to June, orders have slowed to just under 15,000 units in the most recent three months.

“Year-to-date order levels are just marginally below historical averages and seasonal expectations, and the market fundamentals remain relatively consistent based on these preliminary orders,” Moyer said. “We expect to see further reductions in backlogs once the final Class 8 market indicators are released later this month as well as continued growth in an already record level of inventory. The pressure on OEMs to reduce build rates continues to grow.”