Class 8 Orders in August improved 49% year-over-year and pushed past 21,000, pointing the way to higher orders later in the year and stronger production in 2018 compared with this year, industry analysts said.
Orders reached 21,200, according to ACT Research Co., citing preliminary data it would revise if needed later in September, when truck makers provide final tallies.
The orders were on a par with the August 2015 final total of 20,197. Class 8 orders were 14,194 in the 2016 period.
“This bodes well for hitting our North American production forecast,” which is 245,500 heavy-duty trucks, ACT Vice President Steve Tam said.
But that will require 25,000 to 26,000 orders each month in the fourth quarter, and there may come a potential spike to 30,000 in December, Tam said.
“Most of this better-than-expected performance that we have seen this year is probably accelerated replacement as opposed to fleet growth,” he said. Going forward, however, he noted that an improving freight market — aided by weather-related disasters — could play a role.
“As much as I hate to bring it into the conversation, with the hurricane we’ve just had and the one we are about to have, both of those are going to generate the need to move freight,” Tam said. “They are going to lead to replacing vehicles that were destroyed. So from a trucking industry and a truck equipment perspective, it is a net positive because it is going to tighten up capacity. That’s a really bad way to do it.”
Meanwhile, the research company FTR pegged the August order number at 20,700, also citing a preliminary figure.
“It is a good number for August and the orders keep going up, but very slowly. It looks like May’s 16,500 orders will be the low point for the year,” said Don Ake, FTR vice president of commercial vehicles.
“A good thing about the recovery this year in the market is it’s been more smooth. The factories can ramp up production without a lot disruption or overtime, which means they are running at a good rate and they are running their factories efficiently.”
FTR raised its North American production forecast to 300,000 for 2018, up from 285,000.
To support that production target for next year, Ake said orders in the fourth quarter would need to be big — somewhere in the mid-30,000 range for each month. Among the factors influencing FTR’s forecast is higher freight growth that is “stressing trucking capacity,” he said.
Plus, Ake suggested that tight capacity will be intensified when all trucks have electronic logging devices, since ELDs will hurt some carriers’ productivity. A federal mandate requiring use of ELDs begins Dec. 18 for most carriers and will lead to more trucks needed to haul the amount of freight generated in 2018, he said. Orders for 2018 delivery usually begin getting placed in October, Ake said.
One truck maker noted improved orders in its latest earnings conference call.
Navistar International Corp. Chairman and CEO Troy Clarke said strong order activity is adding momentum entering the fall selling season.
“We’ve taken nearly 14,000 orders for our new LT Series [over-the-road heavy-duty truck] during this fiscal year, and as important during the quarter, we began customer shipments of our LT Series and RH Series [regional haul Class 8 truck] with the new 12.4-liter A26 engine. And we’ve already received nearly 3,000 orders for the A26 in these products,” Clarke said on an earnings call with stock analysts Sept. 6.