Class 8 Orders Jump 200% in February to 24,000 Units, Research Firms Report

This story appears in the March 7 print edition of Transport Topics.

New Class 8 truck orders in North America jumped more than 200% in February to about 24,000 units, the fourth month in a row of 24,000 orders or more, market researchers ACT Research Co. and FTR Associates said in separate reports.

“A cyclical recovery is definitely underway, as demonstrated by yet another month of very strong orders,” Roy Wiley, spokesman for Navistar Inc., which builds International trucks, told Transport Topics.

ACT, Columbus, Ind., put preliminary orders for February at 24,300 units, while FTR Associates, Nash-ville, Ind., counted 23,998 units, in reports issued March 2.

“February’s figures were a 210% increase over the same month last year, when OEMs received 7,729 orders,” Jonathan Starks, FTR’s director of transportation analysis, told TT.

“What’s more significant is that even though orders fell 12% from January’s total of 27,235, we’ve now had four straight months of orders far greater than 20,000,” Starks added.

Both research firms said orders in November and December exceeded 25,000 in each month.

The orders have not yet translated to a surge in truck sales. New U.S. Class 8 sales in January numbered 9,236 trucks, down from 11,537 in December, according  to WardsAuto.com.

“Typically, the order-to-build cycle is within a four-to-six month window,” Steve Tam, ACT’s vice president of the commercial vehicle sector, told TT. “When new orders are made, they can be for delivery over a 12-month period, but we think we’ll start seeing these orders reflected in deliveries in the second quarter.”

Both analysts said that strong orders could continue for several more months.

“The order strength continues to put upward pressure on our forecast, but it remains for now 244,000 for North American Class 8 production this year,” Tam added.

“Orders are likely to be elevated for several months more, and then ease back,” FTR’s Starks said. “You’d have to get a real strong surge in the economy for those orders to stay that high or get higher.”

Dealers and truck makers were more cautious about the outlook.

“Projections for heavy truck production this year cross a wide spectrum, and I’ve seen several differing numbers,” Kyle Treadway, president of Kenworth Sales Co., with 18 branches in the west, based in West Valley City, Utah, told TT.

“Lately, those numbers seem to be increasing as component manufacturers ramp up and truck OEMs are feeling more secure in their ability to meet demand,” Treadway, also chairman of the American Truck Dealers association, said.

“We’re all expecting inflation in the later quarters this year to play a significant role in dampening and/or channeling that demand,” he then cautioned.

“Activity here has been a little soft, not as robust as other parts of the country,” Ronald Remp, owner of Wheeling Truck Center, a Volvo dealer in Wheeling, W.Va., told TT. “Talking to other dealers in my region, it appears to be the same for everyone.”

“We don’t believe this gangbusters demand can keep up its level for very long, and we see it leveling off at a faster rate than those analysts,” said Navistar’s Wiley.

“Most of the large and medium fleets have already put in their orders for 2011, and while some small fleets and owner-operators may want to buy trucks, getting financing is still difficult for them.”

“Order input has been strong right now, but my opinion is that you’re gong to start in see a decline on orders in the near future, because people capable of buying are doing it right now,” Jeff Pengra, in charge of Class 8 fleet sales at Allstate Peterbilt, St. Paul, Minn., told TT.

Pengra said most of the orders came first from the larger fleets, followed by medium-sized ones.

“We haven’t many owner-operators, and the small fleets are just now starting to look, but then they’re getting hit with sticker shock, and it’s still tough on the financing side,” Pengra said.

“I think a lot of the ordering has been done predominantly by the bigger fleets but in my area, we have mostly smaller ones,” Duane Kyrish, president of Longhorn Truck Sales, Austin, Texas, told TT. “Our parts and service business has just exploded, and we’ve seen a lot of quote activity.”

Kyrish, International’s ATD board member, said that several Navistar dealers in other parts of Texas have told him that they’ve taken some “huge orders.”

“And I’m very optimistic that the little guys around here will follow later this year,” Kyrish said.

Tam said that ACT’s projection of a 244,000 build rate in North America would be the first time since the recession that new trucks built in one year would be “slightly higher than the replacement rate.”

ACT forecast that about 182,000 of new Class 8s would be sold in the United States, 26,000 in Canada, 18,000 in Mexico and the rest would be exported from North America.