Early reports on Class 8 truck orders for the month of August show a modest increase compared to July, but as manufacturers open up slots for 2020, it seems that fleets are in no hurry to fill them.
Preliminary Class 8 truck orders for August are projected to be 10,400 units, according to analysis from FTR, up 4% compared to July, but down 80% compared to August 2018. Truck orders have fallen into a narrow range since May, averaging 11,000 units a month, says FTR.
Manufacturers have worked through most of the backlog from 2018 and are beginning to open up 2020 build slots, but FTR expects that fleets will be in no hurry to start ordering for next year.
“The Class 8 market is at a turning point,” said Don Ake, FTR’s vice president of commercial vehicles. “The huge orders in 2018 supported the robust production last year and through much of 2019. Now the economy has slowed and there are enough trucks to handle the available freight growth. OEMs are cutting production rates, eventually down to near replacement demand levels.”
Ake added that uncertainty in the economy due to the trade war with China is causing businesses to hold back on capital investment and could be contributing to cautiousness from fleets as well.
“Fleets are going to be cautious about buying new equipment in the short term. We do expect orders to increase in October,” said Ake. “However, if freight growth is still muted and manufacturing sluggish, the big fleets may just place orders for Q1 and take a wait and see approach.”
Medium duty, Class 5-7 truck orders are expected to be 18,800 units, a 10% increase from July. However even the medium-duty truck market, which has been steady for several years is perhaps reaching its peak, according to ACT Research. August orders were down 22% year-over-year.
“If the weakness in the Class 8 market is a reflection of broad softness in freight-intensive economic sectors, the modest downturn in Classes 5-7 order activity is more reflective of the still-healthy consumer economy in much of North America,” said Kenny Vieth, ACT president and senior analyst. “Though, after a seven-year positive run and some inventory building, the MD is looking increasingly tired.”