New Truck Orders Fall 23.4%, But Still Hit 16,200 in August

This story appears in the Sept. 10 print edition of Transport Topics.

New heavy-duty truck orders fell 23.4% to 16,200 in August from a year earlier, according to preliminary figures from ACT Research Co., and some truck makers said they plan more downtime at plants in order to trim production.

While orders declined for the eighth straight month on a year-over-year basis, they rebounded sharply from July’s tally of 12,925, which was the lowest since August 2010, and August’s total represents a solid pace.

“The good news is the wheels are not falling off,” ACT Vice President Steve Tam told Transport Topics.

Orders are still lagging behind year-ago levels, “but we’ve taken a step in the right direction,” said Tam, who predicted more sequential increases in the months ahead.

Volvo Trucks is planning to stop production during the weeks of Sept. 17 and Oct. 15, and is continuing to monitor the overall situation, said Magnus Koeck, the company’s vice president of marketing and brand management.

“We knew going into 2012 that it would be a choppy year from month to month, and this is evidenced by the swing in industry orders from July to August,” Koeck said. “Economic uncertainty remains a factor as fleets continue to delay purchasing decisions.”

Sister company Mack Trucks Inc. is currently planning to be down during the weeks of Sept. 24 and Oct. 15, said John Walsh, vice president of marketing. “As always, we’ll continue to monitor market conditions to determine if additional production adjustments might be necessary,” he said. “Despite the slowdown in new truck orders, given ongoing replacement demand and positive customer response to our current product and support offer, we still expect 2012 to be a solid year for the industry and Mack.”

Peterbilt Motors Co. General Manager Bill Kozek said his company “has made production adjustments in line with our order activity, and will increase production when order activity improves, which we anticipate in the next few months.”

He pointed to several factors that could boost order intake.

“Currently, fleets are planning their 2013 purchases, construction activity is improving, interest rates are very low, credit is available and there is still 50% bonus depreciation for 2012,” Kozek said.

David Hames, general manager, marketing and strategy at Daimler Trucks North America, predicted continued caution in the truck market.

“While we were pleased that August orders came in strong, we believe the industry will continue to be cautious while the economy stays in slow-growth mode,” he said.

For its fiscal third quarter ended July 31, Navistar International Corp. said it received 8,100 new Class 8 orders in the United States and Canada, down from 9,300 in the same period a year ago, according to a Sept. 6 presentation announcing the company’s quarterly results.

“We do expect volumes to increase as we complete the transition to our clean engine solution in early 2013,” said Elissa Koc, Navistar’s manager of communications.

Navistar has not made any announcements regarding changes to production and build rates, she said.

ACT’s Tam said carriers want to buy new trucks, but remain hesitant.

“We’ve got a lot of economic headwinds, a lot of mixed signals as far as the economy and freight are concerned,” Tam said. “It’s enough to unnerve some potential buyers to the point they’re continuing to wait.”

Tam said carriers will need to replace their trucks, but for now, the economy is leaving them in an “uncomfortable position.”

Richard Witcher, CEO of Minuteman Trucks Inc., Walpole, Mass., said political uncertainty is also contributing to lower truck orders.

“All of the uncertainty and vacillation coming from Washington causes truck buyers and other businesses to sit on their hands,” he said.

Witcher, who also is chairman of American Truck Dealers, said buyers are delaying large-scale purchases until they see what happens during the rest of the year in Congress regarding possible tax increases and spending cuts, which could affect economic growth.

Although truck orders continue to decline on a year-over-year basis, U.S. retail truck sales have risen from the year-ago level for 31 consecutive months, including a 27.4% gain in July, the most recent figure available, according to data from WardsAuto.com.

Meanwhile, truck manufacturers continue to work down their backlogs.

At the end of July, industry backlogs stood at 77,690 units, down from 87,889 at the end of June.

August numbers are not yet available, but Tam predicted that manufacturers probably shed at least another 4,000 to 5,000 units in backlog last month.

Associate News Editor Jonathan S. Reiskin contributed to this story.