Class 8 orders were 20,800 in December, up 11% year-over-year (vs. up 9% year-over-year in November), according to figures released by A.C.T. December marked the third consecutive month of over 20,000 Class 8 orders.
“Our sense is that some investors were expecting orders as low as 10,000,” Bear Stearns said. “Accordingly, we believe December’s orders were meaningfully better-than-expected -- particularly given the current freight environment.”
Clas 5-7 orders were 17,500, up 74% year-over-year (vs. up 43% year-over-year in November).
“We acknowledge there are fewer and fewer Class 8 optimists left, and clearly our own pre-buy expectations have been coming down,” Bear Stearns said. “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 bottom; (2) A.C.T.’s lowered forecast 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; (4) The only thing that seems clear about 2010 is that prices are going up; and (5) Seasonally-adjusted, the last three months' order intake is roughly 230K annualized vs. A.C.T.’s ’08 build forecast of 216,000.”