March Class 8 Orders Not as Weak as First Glance May Appear
April 04, 2013
Preliminary numbers for March show Class 8 truck orders dropped slightly from February, but analysts are not concerned by when they see as a temporary dip.
FTR Associates has released preliminary data showing March Class 8 truck net orders at 21,817 units, 4% below February, while ACT Research predicts final numbers will approach 22,100.
“While down month-over-month, March’s Class 8 net orders were up 10% year-over-year and were the fourth best in the past 13 months,” said Kenny Vieth, president and senior analyst, ACT Research.
Eric Starks, FTR’s president, called the March numbers "a good sign for the near-term. We expect that anything above 19,000 units in orders adds to the backlog of orders to be built, which we believe will be confirmed when numbers are finalized mid-month."
Although FTR was surprised to see orders fall from recent levels, Starks said, "it is good to see actual data suggesting the market has stabilized with more upside potential for the second half of the year. The next few months’ orders will be critical in understanding the demand pressure as we move into the summer."
Jeff Kauffman, a Sterne Agee analyst, noted that despite the lower month-to-month numbers, "March heavy-duty truck orders showed improvement overall, with year-on-year orders up about 10%, and the season-to-date decline in heavy-duty trucks actually improving another 300bp. With these orders against an easy April comparison, this bodes well for the industry outlook entering the summer."
Medium-duty numbers showed a similar trend.
According to ACT Research, Classes 5-7 net orders in March were down month-over-month and year-over-year. The final numbers, which will be released mid-April, will approach 15,200.
“For medium-duty, the tough year-over-year comparisons mask an otherwise solid order month," Vieth said. "March’s medium-duty order volume was the fourth best in the past 20 months. Historically, March has been the second strongest order month of the year for MD vehicles.”
Kauffman notes that medium-duty orders, although a pause from last month's 13% increase year over year, "is consistent with an improving housing market, and bodes well for Navistar," which has traditionally been the market share leader in this market.