New Truck Orders Rise Sharply in August

This story appears in the Sept. 13 print edition of Transport Topics.

New orders for Class 8 trucks in North America climbed sharply in August, two commercial vehicle research companies said in preliminary reports.

Analysts and industry executives held divergent views of what the numbers mean for the near-term strength of the new truck market, with some predicting a flat market and others forecasting growth.

FTR Associates, Nashville, Ind., said Sept. 3 that all major American original equipment makers received 12,337 new heavy-duty truck orders last month, a 16.8% increase over August 2009 and 8.3% better than July.

ACT Research Co., Columbus, Ind., said Sept. 7 that it counted about 12,600 net new Class 8 orders for August, calling it a strong jump over last August; ACT did not provide a percentage increase.

Both companies said final order figures usually vary 2% to 3% from preliminary data.

Analysts for the companies said that the increases, while fairly large in percentages, had to be measured against the worst year in heavy-duty truck production in a generation.

“I read these numbers as not being a bad thing but not a good thing, either,” Eric Starks, FTR’s president, told Transport Topics. “The numbers suggest that the economy hasn’t fallen off a cliff, but I don’t think that they give truckers enough of a sign of fundamental strength in the market that will allow them to buy new trucks in quantities yet.”

Starks declined to project orders for the rest of the year.

“Fleets will go through the heaviest part of their shipping season by the middle of October,” he said. “They’ll have a better sense by then of what their profits for the year will look like and what kind of freight environment they’ll be facing next year.”

Kenny Vieth, ACT Research senior analyst, said the summer months traditionally are the weakest period for new Class 8 orders.

“Also remember, after the run-up in new truck orders from April through June, talk about a possible double-dip recession cropped up, and experts were discussing Round Two of the global financial crisis,” Vieth told TT.

“The fact that orders remained as good as they have speaks well for how trucker profits are coming back,” he said. “Fleets are getting old, and fleet managers are going to have to think about replacing trucks sooner rather than later.”

Brian Cota, vice president of sales for Freightliner Trucks, a division of Daimler Trucks North America, was optimistic that orders would surge in the fall.

“Historically, orders are soft during the summer months of July and August and rebound in September,” Cota told TT.

“We expect this trend to hold true in 2010 for many reasons,” he said. “First, our dealers are reporting robust parts and service activity as our customers have all the business that they can handle.”

Cota also said that freight demand remains consistent and rates are improving.

Roy Wiley, spokesman for Navistar Inc., said that, in addition to the summer lull, “there’s no question that truck prices have increased and that has held off higher orders, but we think that many customers are waiting for us to start distributing trucks with our 2010 engines, which we have started to send to customers.”

Truck dealers said orders varied among regions.

Jack McDevitt Jr., president of McDevitt Trucks Inc., Manchester, N.H., said that order activity remained low in New England, where much of the economy depends upon construction.

McDevitt Trucks has four locations in New Hampshire and Massachusetts, selling Mack, Volvo, Peterbilt, Western Star, Sterling and Isuzu trucks.

“Speaking for my dealership, it’s been very slow,” McDevitt told TT. “We represent multiple product lines, and in the Northeast, we’re dependent on the vocational market, especially construction, and with housing starts way off, vocational orders are way off. The market is still very, very soft.”

McDevitt said one bright spot is that the fleets that have bought 2010-technology trucks have spread the word that the system works much better than with previous technology introductions.

“They are getting good fuel mileage, better than we’ve seen in years,” McDevitt said. “The results have been phenomenal. We have literally no trucks with problems, plus drivers have been getting more power and performance.”

Guy Cheney, sales manager for Peterbilt of Louisiana, Baton Rouge, was much more optimistic.

“We have kind of a primed market, driven by the oil field,” Cheney said. Unlike the three-year downturn most new trucking dealers have experienced, Cheney said, Louisiana suffered a nine-month down period starting in March 2009.

“That still scared a lot of people,” he said, “but we’ve had new discoveries in natural gas, both the regular in-ground kind and in oil shale, and that’s driven major demand for vocational trucks.”

Cheney said that even though most of the tractors were vocational, many fleets were ordering sleepers so their drivers could use them as mobile offices or to store more freight.