5.1 C
Vancouver
Friday, March 24, 2023

Class 8 truck production down

Class 8 truck production down

North American orders for Class 8 trucks dropped to 16,800 units for May, according to data tracked by ACT Research; a 30% decline from April, the firm noted.

While Steve Tam, ACTโ€™s vice president, noted in a statement that Mayโ€™s Class 8 order volume is the lowest in the past seven months, it is still 18% higher year-over-year when compared to May 2016. On top of that, the Mayโ€™s dip corresponds to a seasonally-expected decline in orders, he stressed.

โ€œWhile the magnitude of the decline is greater than expected, the timing is spot on,โ€ said Tam. โ€œMay is typically the time of the year when order intake drops below average.โ€

Don Ake, vice president of commercial vehicles for research firm FTR Transportation Intelligence, added that Mayโ€™s order numbers โ€œare not that worrisomeโ€ considering the steady volume of orders over the past seven months.

โ€œIt appears the typical summer order slump just showed up one month early,โ€ he pointed out. โ€œIt does indicate the market is functioning normally and there is a steady, not robust, upward trend. The slowdown in order activity will give the OEMs a chance to get production lined up with demand.โ€

Total Class 8 orders for the past twelve months are running at about 211,000 units right now, Ake pointed out, and FTR still expects the Class 8 build and sales to continue to increase as the year progresses.

โ€œMay orders were actually very close to our January forecast, so the market continues to move ahead as expected,โ€ he noted. โ€œOrders should continue at about this pace through the summer, which will be good enough to support stronger demand in third and fourth quarters.โ€

Michael Baudendistel, vice president of the transportation and logistics research group at Stifel Capital Markets added that he is โ€œnot shockedโ€ ย to witness a โ€œmid-year lull in order activity materializeโ€ as recent order trends belied persistent weakness in core trucking markets.

โ€œWhile we still believe there is more potential upside than downside to our 215,000 unit 2017 forecast, given a steeper-than-expected decline in May, we are leaving [that] outlook unchanged for now,โ€ Baudendistel noted.

โ€œWe believe the Class 8 order weakness in May should be viewed as a step back from unsustainable levels,โ€ he explained. โ€œOverall, we continue to view North American [commercial] truck order trends over the past several months favorably, and believe conditions are setting up well for a strong 2019-2020, which should be years with significant replacement demand.โ€

North American orders for medium-duty trucks, by contrast, witnessed renewed strength in May, noted ACCTโ€™s Tam, with orders for Class 5-7 units jumping to 21,200 units โ€“ up 13% from April and up 22% compared to May of 2016.

โ€œMedium duty orders saw a resurgence, though not quite to the level they enjoyed in the December to March time period,โ€ Tam added.

Yet Stifelโ€™s Baudendistel remains โ€œcautiousโ€ where medium-duty order trends are concerned.

He said Stifel is holding fast to its production forecast of 235,000 Class 5-7 units for 2017, up 1% from last year, as Class 5-7 orders are only up 2% from 2016 at this point.