This is the lowest level for orders since September 2006. Orders for the three-month period, October, November and December 2008, are running at an annualized rate of a meager 119,100 units. Class 8 order backlogs fell to 52,703 units with a backlog to retail sales ratio of 3.9 months. This suggests further reductions in production, note FTR analysts.
Order weakness remained in all geographic areas, but a noticeable decline in non-U.S. orders (Canada, Mexico, and exports) suggests that there is significant downward pressure on the forecast for 2009, according to Eric Starks, president of FTR Associates
"In the last quarter of 2008, orders for non-U.S. markets came in at an annual rate of 19,080 compared to the current new factory shipments forecast of 40,231 units for Canada, Mexico and exports," Starks says. "This just adds to the already negative outlook for Class 8 production in 2009."
· U.S. order activity seems to have stabilized (albeit at low levels) in the last four months of the year, with average order activity of 8,031 units (compared to 8,548 units in December).
· Backlogs fell further to 52,703 units, its lowest level since early 2003.
· The backlog/retail sales ratio edged lower to 3.9 months. This reading indicates that further reductions in production are likely over the near-term.
· Inventories fell by 3,377 units in December from November levels to a reading of 38,501 units. This is the lowest level seen since late 2004.
· The inventory sales ratio fell to a better reading of 2.4 months. The historical average is 1.8 months. With retail sales showing a healthy increase in December from November levels this artificially dropped the I/S ratio. Expect the ratio to increase over the next several months as sales start to decline.
· N.A. production stabilized in December with 13,214 units built. This was down only slightly from November levels of 13,872. However, November is when the industry saw a substantial drop in output as build fell 26% from October levels. Further reductions in build are expected over the next several months.