Although the pre-buy for Class 8 trucks hit a little later than expected, it appears to be coming on fast and furious, according to market analyst Bear Stearns.
In early August, Bear Stearns published its Class 8 monthly order forecasts through January 2007, the date of the EPA's next diesel emissions deadline. At the time, Bear Stearns' view was that a 2006 pre-buy was inevitable and approaching rapidly, based on channel checks.
Since August, fleets have ordered 191,269 Class 8 trucks - 13,731 (or 7%) fewer than Bear Stearns expected. Orders in September-December went up as anticipated, but at a slower-than-expected rate. January was a blowout month, with an all-time order record of 43,100 trucks (vs. a forecast of 39,000).
Bear Stearns is still expecting a negative inflection point in mid-May, projecting 355,000 builds in 2006 and a 191,000 backlog at January 31, implying 138,000 available 2006 slots. If monthly orders average 40,000, 2006 slots should sell out in mid-May (consistent with Bear Stearns' August forecast). The risk is likely to the upside to order assumptions, in which case the backlog would sell out earlier than mid-May.
Bear Stearns' view has been, and continues to be, that the pre-buy may be longer and stronger than consensus expectations.