Heavy-Duty Truck Orders Surge in September

This story appears in the Nov. 1 print edition of Transport Topics.

Orders for new heavy-duty trucks jumped about 40% in September compared with the same month last year, an unexpectedly strong showing that analysts said resulted from a sharp boost in trucker confidence that sets the stage for a strong sales year in 2011.

“We think 2011 is going to be a sensational year,” said Jack McDevitt Jr., a Mack truck dealer based in Manchester, N.H.

The increase in September over the orders in August also was much more than normal, another sign of growing confidence, two analysts said.

September orders of Class 8 commercial vehicles in North America tallied at 15,231, up 37% from September 2009, ACT Research Co., Columbus, Ind., reported Oct. 21.

Another major industry analyst, FTR Associates, Nashville, Ind., reported 15,100 units, similar order numbers for North America and a slightly higher percentage gain from last year.

“This represents a 23.1% increase month-over-month and an increase of 40.5% year-over-year,” FTR said in its Oct. 21 report. “For the last year, orders have averaged 12,590 units. For all of 2009, orders averaged just over 10,000 per month.”

Kenny Vieth, ACT’s president and senior analyst, said that truckers’ confidence has risen dramatically.

“There is a 180-degree difference in how truckers feel now from the gloom that overwhelmed them a year ago,” Vieth told Transport Topics. “Generally speaking, profits and margins are all up, and asset values are rising, because trucks and trailers are worth more than they were a year ago.”

ACT reported 12,362 Class 8 orders in North America in August and that the percentage gain in September was much higher than normal.

“The usual September over August increase is about 2%, so that the spike this September is another indication of a confident market,” Vieth said.

Jonathan Starks, FTR’s director of transportation analysis, agreed.

“Orders did jump significantly, relative to August, and that gives us more confidence that things will continue to pick up in the coming months,” Starks told TT.

Representatives of the two largest truck makers agreed that order activity has picked up.

“We have also noticed the increase in orders received, and this is a very good sign for the industry,” Brian Cota, vice president of truck sales for Freightliner Trucks, told TT. “Although orders were below replacement rates, quoting activity continues to trend up, and we are optimistic about the forecast for 2011 production.”

Freightliner Trucks is a subsidiary of Daimler Trucks North America, itself part of global, Germany-based truck manufacturer Daimler AG.

“Orders are coming in consistent with our belief for a moderate recovery in 2010 and 2011,” Jack Allen, president of Navistar Inc.’s North American Truck Group, told TT. “Fleets are replacing trucks, and dealers are replenishing low inventory levels, but we aren’t seeing fleet growth.”

Dealers agreed that ordering has risen significantly.

“We’re seeing some good activity in lease quotes and for new equipment for the lease side of equipment,” Ronald Remp, president of Wheeling Truck Center, Wheeling, W.Va., told TT. “I do know that Volvo corporate has received very strong order activity recently.”

“Here in New England, we definitely are seeing much greater pricing activity than just two months ago, and some increased ordering,” said McDevitt, president of the four-location McDevitt Trucks Inc. “We had a meeting recently with Mack executives, who told us they’ve had the best ordering activity in the entire year in the recent period.”

Backing up these projections for a strong 2011 in truck purchases, CK Commercial Vehicle Research, Columbus, Ohio, released its annual fleet study on Oct. 25.

“The strongest demand comes for Class 8 units” Chris Kemmer of CK Commercial Vehicle Research said in the report; “88% of the power units planned by this group for 2011 are for Class 8 vehicles,” he said.

W.M. “Rusty” Rush, chief executive officer of Rush Enterprises Inc., New Braunfels, Texas, which describes itself as the largest commercial vehicle dealer in the United States, said that trucking’s economic conditions had improved so that fleets had the freight and credit to replace their aging trucks.

“But there’s still a hesitancy by many operators to pull the trigger on truck sales,” Rush told TT. “The pressure is mounting on them to improve their trucks because their age is increasing, but worries about the overall economy are reinforcing their indecision about whether to buy or not.”

FTR’s Starks said truck orders “were finally getting close to the point of replacement levels, a very good sign.”

He also pointed out that orders have been running consistently ahead of sales this year, another good forward-looking sign for growing sales.

“In late 2008, during the height of the recession, the monthly sales figures were running 5,000 units ahead of the order rate,” Starks said. “That pointed the way to the disastrous sales year of 2009, but now, the higher orders over sales rates indicate much stronger sales in 2011.”