December Class 8 Orders Skyrocket to Over 25,000, Analysts Say

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

Orders for new Class 8 trucks in North America more than doubled in December from the same month in 2009 and totaled more than 25,000 units, two research organizations reported.

ACT Research Co., Columbus, Ind., reported Jan. 5 that truck manufacturers had received orders for 25,500 new Class 8 vehicles in the month, up 115% from the previous December.

FTR Associates, Nashville, Ind., reported similar figures, saying that manufacturers had received orders for 25,247 Class 8 units, up 118% from December 2009.

“The stars are coming into alignment for Class 8 demand,” Kenny Vieth, president and senior analyst at ACT, told Transport Topics. “Truckers are making money, and the fleets are old, while truckers have gained confidence that the economy will not come crashing down on their heads anytime soon.”

He said that three strong months of order activity since October have yielded 71,000 units and represent “a ramp-up in demand consistent with the up-cycle we have been forecasting . . . and confirms production levels will increase significantly in 2011.”

Jonathan Starks, director of transportation analysis at FTR Associates, said that the slight drop from November, when orders were near 26,000 units, was significant.

“Orders are not dropping off as usual in December, which shows that truckers are starting to replace fleets and that they have strong confidence that the economy is back,” Starks told TT.

“Within the orders, if you look at November and December combined, all of the original equipment manufacturers showed improvement, so that the rising orders are broad-based, with not just one or two OEMs driving the numbers,” he added.

Starks said that FTR was forecasting that total North American Class 8 production would reach 201,000 vehicles this year, up from 150,000 in 2010. He said the U.S. component of that figure would be about 141,000, up from 105,000 in 2010. Wards Auto.com reported that 95,410 Class 8s were sold in the United States through November last year.

“We are seeing an interest in fleets replacing vehicles,” Jim Hartman, owner of Truck Enterprises, Harrisonburg, Va., told TT. Truck Enterprises is a Kenworth and Volvo dealer with locations in Virginia, West Virginia and Maryland.

“We’re not seeing a large contingent looking to add more vehicles to their fleets, but there are some,” Hartman added.

“Primarily, buyers are looking to replace their aging equipment, but not only because they’re aging,” he said. “Another reason is to retain their best drivers, and better fuel efficiency is also important, plus increased uptime that they get with new vehicles is also vital . . . because the need for just-in-time delivery still exists.”

Hartman added that small fleet buyers have not returned to buying in significant numbers.

“We’re also not seeing much vocational buying,” he said. “Many states will be limited in their spending this year, which is a source of concern for vocational trucks.”

“We are seeing the same thing [as the research firms], although not across the board,” Kyle Treadway, president of Kenworth Sales Co., West Valley City, Utah, told TT. “Nevada is still suffering and parts of Idaho are weak, but otherwise, we’re seeing an uptick in both orders and sales. In recent months, we saw interest in asking for quotes, but in the past month, we’re now signing actual orders.”

Kenworth Sales Co. has locations in several Mountain and Western states.

“It’s mainly been large fleets who are ordering and buying, and only for replacement units, because of aged equipment,” Treadway said. “They’re not increasing the size of their fleets.”

He said that owner-operators and small- to medium-size fleets have not yet returned to the market.

Treadway, who is also president of American Truck Dealers, said the stronger market has become nationwide.

“The ATD folks that I do interact with have seen improvement, as well,” he said. “It started in the Midwest, moved east, and now it migrated west, including West Coast states, as well.”

Roy Wiley, spokesman for Navistar Inc., which builds International trucks, said the December order numbers were “good news.”

“But they reflect what we’ve been saying all along, and they provide a ramp-up for a strong 2011, especially in the second half of the year,” he told TT.

Mack Trucks Inc. and Volvo Trucks North America, both subsidiaries of global truck maker Volvo AB, also were optimistic.

“The preliminary order numbers reflect the fact that more customers, particularly on the highway side, have come off the sidelines, spurred by increased confidence in the strength of the economic recovery and historically high levels of replacement demand,” Ron Huibers, senior vice president of sales and marketing for VTNA, told TT.

“While the construction segment of the Class 8 market remains weak, overall demand for heavy-duty trucks has ticked up the past several months,” Kevin Flaherty, Mack’s senior vice president, U.S. and Canada, told TT.