Truck orders continue to rebound

North American Class 8 net order momentum continued in August, reaching 20,500 units for the month, according to FTR preliminary data. August order activity was up 3% month-over-month, and up 90% year-over-year.

Class 8 net orders for the last 12 months total 177,000 units, and are expected to stay in the 20,000 unit range for the next few months as buyer confidence increases, the economy recovers and freight volumes rise.

“This is another positive sign for Class 8 trucks – the second consecutive 20,000-unit month and proves that the July total was not a fluke, with a possible trend developing,” said Don Ake, FTR vice president commercial vehicles.

ACT Research President and Senior Analyst Kenny Vieth noted that August’s preliminary data puts August orders for medium- and heavy-duty vehicles at an eight-month high.

“That volume represented a 5% gain from July and a 26% improvement compared to year-ago August,” he said. “The month’s orders marked a third consecutive positive reading, following a period where 18 of 19 consecutive months had negative year-over-year comparisons.”

Ake said fleets are more confident overall, but mostly larger fleets are the ones purchasing replacement trucks, with a few orders going towards expansion purposes. “Medium-sized and smaller fleets remain cautious about ordering trucks,” he added.

“This is an odd situation in that it is a highly uncertain, yet very stable, environment. You have a pandemic, a presidential campaign, and social unrest all occurring at the same time,” Ake said. “However, the economy is briskly recovering and generating ample freight. Fleets are ordering only what they need, and thus, orders are aligning very close to production rates.

Considerable parked Class 8 tractor capacity, generous unemployment benefits, and consumers spending more on goods and less on experiences, Vieth said, “has created a perfect storm for carrier profits over the past several months. That convergence of positive factors pushed spot freight rates to record highs in August, and the rally in rates is reflected in the sustained rebound in new medium- and heavy-duty commercial vehicle demand.”

Ake said he expects orders to track in the current range until those risk factors are resolved, adding “Right now, the market is in a holding pattern and may stay there through the rest of the year.”