Preliminary Class 8 net new orders hit another all-time high at 49,900 in March, but were modestly below expectations, according to Bear Stearns, which had been projecting up to 50,000.
Orders were up 88.6% year-to-year in March (vs. up 37% year-to-year in February). The Class 8 pre-buy clearly continues to drive the upside, according to Bear Stearns, which estimates that there are only about 41,000 production slots left for 2006. There may be some spill-over into January 2007 due to the timing of engine inventories. Bear Stearns thinks that might represent another 40-50,000 slots.
Class 5-7 net new orders were 35,500 – well above Bear Stearns’ projection of 20,000 to 22,000. March medium-duty orders were 24% better than the all-time high of 28,666 and improved sharply from 19,449 m/m from February.
“We believe strength was driven by a recent push by 1-2 OEMs to maximize dealer inventories of 2006 trucks ahead of 2007,” Bear Stearns said in a release. “While good for 2006 earnings, it sets up a bigger downturn in 2007.
“How does that data impact the stocks? Monthly orders drive the stocks, and our sense is that there will be one more month of strong Class 8 orders. We continue to expect the backlog to sell-out in mid-May and we believe this order strength may continue to support very near-term positive momentum in the Class 8 names. However, with a finite number of 2006 slots left, we would continue to use order strength to take profits ahead of an order downturn in the second half of 2006.”
