Class 8 Truck Sales Hit High Point, But Leading Indicators Point to Downturn

Class 8 truck retail sales hit an all-time high September, but leading indicators are pointing to a downturn, according to ACT Research’s latest State of the Industry: Classes 5-8 Report.

“September North American Class 8 retail sales reached a new record in seasonally adjusted terms, and in absolute terms were the highest since December 2006, ahead of the EPA07 emissions standards,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “While most of the incremental strength came from the straight truck market, tractor capacity was added a touch faster than expected.”

Denoyer added, “We realize this seems to conflict with signs of capacity contraction such as bankruptcy and employment data, and would remind readers that private fleets, which now account for more than half of truckload capacity, are still growing.”

The rosy retail picture hides declines in other areas, according to ACT. The report found that “less negative” freight data reported early in the third quarter had softened since the imposition of further tariffs on Sept. 1 affecting $300 billion worth of goods imported from China.

“In concert with weak/deteriorating freight volumes and rates, forward-looking demand indicators continue to erode, with mid and downstream data points beginning to cycle lower,” said Denoyer.

Denoyer said that the current situation with weak truck orders and strong build is unsustainable and that downward build plan revisions are already happening. However, ACT expects the worst case scenarios for heavy-duty vehicle demand to remain unlikely.

Regarding the medium duty markets, he commented, “Medium duty demand metrics remain in better balance, but there are signs of fraying on weak net orders, relative build strength and excessive inventories.”

The State of the Industry report offers a monthly look at current production, sales and general state of the on-road heavy- and medium-duty commercial vehicle markets in North America. For more information, click here.