Truck Makers Report Choppy Order Volume in First Quarter
Demand for Class 8 trucks "has hit a soft patch," but at least one industry analyst expects that to be temporary. March Class 8 new and net orders of 22,038 and 20,025 units, respectively, were the lowest order volume since last July, reports ACT Research Co

Mack says it has not had to cut production as some truck makers have.
Demand for Class 8 trucks "has hit a soft patch," but at least one industry analyst expects that to be temporary.
March Class 8 new and net orders of 22,038 and 20,025 units, respectively, were the lowest order volume since last July, reports ACT Research Co.
"Class 8 demand, as expressed by incoming orders in February and March, has hit a soft patch," says Kenny Vieth, president and senior analyst at ACT. "There was a tax-driven prebuy at the end of 2011, and dealers added larger than seasonal stocks in Q1 ahead of rising model year '13 new truck prices.
"For a lot of truckers, the gap between new and used prices remains particularly large. Given all of the above, plus rising diesel prices through Q1, it is not too hard to see why the industry has softened. However, we think a continuation of reasonable freight growth, strong trucker profits, and healthy used truck prices will push demand higher once the current period of uncertainty is worked through."
At the Mid-America Trucking Show a few weeks ago, Paccar's Dan Sobic was asked about the choppy order intake we'd seen in the first quarter. He said that quoting activity was on the rise in October, November, December and January, but "February and March has dropped a little bit."
Like Vieth, Sobic blamed uncertainty. He said if a fleet really needs 50 trucks because it put off buying during the recession, that fleet manager might decide right now to order only 40 trucks because he wants to see how things go.
"Let's call it a thoughtful reconsideration," he said, noting that "I think the volume and freight is going to continue to grow, so I continue to believe the year will be strong."
Kenworth laid off 10% of the workers at its Chillicothe, Ohio plant earlier this month.
ACT's forecast already expected the industry to reduce build rates in Q2 (-4.5%), so the news generally fit its expectations, Vieth says.
"Build earlier this year was too strong relative to the rate of incoming orders. As an example, at the end of February, the three- and six-month order trends were at 296,000 annual rates, while build in February occurred at a 320,000 annual rate. Tack on continued order weakness into March and I think there is a good case to be made for a pullback in production in the near-term."
ACT's forecast is currently sitting at 299,000.
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