Class 8 orders released by A.C.T today were 20,287 in October, up 1% year-over-year (vs. down 27% year-over-year in September).
“While our sense is that much of the strength seen in October was due to historic seasonal order patterns, we note that monthly orders can be volatile,” Bear Stearns said in a release. “Still, if we average weak September orders and stronger October demand, orders were 16,064, up 12% month-over-month from August -- an encouraging result, in our opinion.”
Class 5-7 orders were 16,481 in October, up 20% year-over-year (vs. down 33% year-over-year in September).
“Arguably, Class 5-7 orders are a ‘purer’ measure of economically-derived demand, given that there was a smaller pre-buy in Class 5-7 (although we do think there was a ‘pre-build’),” Bear Stearns said.
“We acknowledge there are fewer and fewer Class 8 optimists left, and clearly our own pre-buy expectations have been coming down as the year progressed; however, we believe there are some interesting dynamics lining up: 1) Freight’s already been bad for a year or more, so our sense is that we are incrementally closer to a rebound; 2) A.C.T.’s lowered forecasts implies two years of production at or below replacement demand in both ‘07 and ‘08. While this did occur during the ‘01-’03 downturn, bad freight fundamentals were further exacerbated by an implosion in used truck prices; 3) Normal trade cycles will likely put upward pressure on replacement demand for the next 3 years; and 4) The only thing that seems certain about 2010 is that prices are going up.”