Truck Orders Slow in June, As Expected

Orders for heavy-duty vehicles in June were slightly off May's pace, while a factory move helped drive medium-duty truck orders down during the month, according to figures released Monday by ACT Research.

Net orders for Class 8 vehicles in June in North America were just under 20,300 units, down slightly from the 20,500 in May. In the medium-duty market, orders for Class 5-7 posted 15,500 net orders, down significantly from May's 19,900 orders.

Analysts, however, say the numbers are to be expected, for three reasons:

1. Orders always slump in the summer.
2. Order activity was so strong at the end of last year and beginning of this year that the backlog of trucks waiting to be built at factories is huge. There are so few open build slots, it doesn’t make sense for a lot of companies to be ordering trucks right now.
3. With freight rates up and fuel prices down, trucking companies are reporting some pretty good profits – and they'd rather reinvest that into their fleets than pay taxes on it, says Kenny Vieth, ACT president and senior analyst.


Vieth notes that that, after a stumble at the start of the year, a modest economic rebound was seen in the April-June timeframe and that the NA Class 8 market is playing out largely as anticipated.

“With the backlog filling early in 2015, Class 8 production and sales metrics continued to gain momentum in June, growing 19% and 17% YTD, respectively. Based on ACT’s expectations for orders and build over the next three months, backlogs will continue to fall before reversing course in October.”

Already, orders of Class 8 trucks over the last six months have equated to an annual rate of 305,000 units.


Concerning medium-duty, Vieth said, “June’s soft, worst-since-last-June net orders need to be put in some context. In the preceding nine months, medium-duty orders averaged 19,800 units per month."

On top of that, about 10% of the Class 6-7 market is simply "out of commission" as Ford moves its F650/F750 production following the end of the longstanding production deal with Navistar.

Recent economic indicators in the housing market could have a positive effect on the demand for medium-duty vehicles, Vieth says. Just think about all the work trucks involved in building new houses, from the dump trucks used in the initial phases to utility trucks, contractor trucks, delivery trucks for new furniture, etc.

"The last couple of data points look like maybe the ice is finally starting to melt a little bit," Vieth notes.

New home starts in June exceeded economists' expectations, jumping 9.8% to hit an adjusted annual rate of 1.174 million, according to the U.S. Commerce Department. And the number of building permits, an indicator of future activity, increased 7.4% in June compare to May, hitting its highest pace in nearly eight years and rising 30% higher than June 2014.