North American Class 8 orders for August reached 10,400 units in August, up 4% from the month before but down 80% from August 2018, according to preliminary data released this week by FTR.
Heavy truck orders have averaged just 11,000 units per month since May.
“The Class 8 market is at a turning point. The huge orders in 2018 supported the robust production last year and through much of 2019,” said Don Ake, FTR vice president of commercial vehicles. “Now the economy has slowed and there are enough trucks to handle the available freight growth. OEMs are cutting production rates, eventually down to near replacement demand levels.”
ACT Research President and Senior Analyst Kenny Vieth noted a weak freight market and rate conditions and a still-large Class 8 backlog continue to bedevil new Class 8 order traffic.
“Though, with OEMs opening their new model-year order books, order weakness is increasingly the story of an overcapacitized Class 8 fleet, as truckers start to make their plans for 2020,” he said. “August is typically a weak order month. Seasonal adjustment boosts the month’s intake to 12,500 units, a narrower 2.8% month-to-month improvement.”
OEMs have built through much of the backlog created by record 2018 orders and fleets are in no hurry to start ordering for 2020, as there are expected to be ample build slots available and no component part shortages. It is expected that the market will return to normal, seasonal order cycles, with large fleets placing their 2020 requirement orders in the last quarter of the year.
Class 8 orders for the past 12 months have totaled 298,000 units.
“There is a tremendous amount of uncertainty in the economy right now due to tariffs and the trade war with China. Businesses are holding back on capital investment and our industry is no exception,” Ake said. “Fleets are going to be cautious about buying new equipment in the short term. We do expect orders to increase in October. However, if freight growth is still muted and manufacturing sluggish, the big fleets may just place orders for Q1 and take a wait and see approach.”