Low Confidence Causes Weak Orders, Says ACT Research

June 21, 2012

In an environment that should support healthy demand, ACT Research says a lack of confidence by the credit-buyer side of the market is at the root of the three-month downturn experienced in the Class 8 market.


"If the pullback in orders was freight-related, we would have expected to see a run-up in cancellation activity, which has not been the case," says Kenny Vieth, president and senior analyst at ACT in the most recent issue of the State of the Industry report. "This suggests to us that the problems with demand are not systemic."

In the report, which covers Class 5 through 8 vehicles for the North American market, Vieth says, "Smaller truckers who have to borrow to buy are most likely driving older trucks with relatively low values. Those truckers need to borrow $90,000-$100,000 to finance a new truck, but their confidence has been shaken by a number of events in early 2012, including economic concerns, a 9.5% jump in fuel prices through Q1, and inconsistent freight early in the year."

Vieth says a continuation of reasonable freight growth, healthy trucker profits and rising used truck prices are expected to support Class 8 demand once the current period of uncertainty is worked through.

ACT is a publisher of new and used commercial vehicle industry data, market analysis and forecasting services for the North American market, as well as the U.S. tractor-trailer market and the China CV market.