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March Class 8 Orders Revised Up 2%

Class 8 and Class 5-7 net new orders were revised up 2% and 16%, respectively, according to figures released by A.C.T. today.

Class 8 orders were 16,761 in Marcdh, up 20% year-over-year (vs. up 19% year-over-year in February). Seasonally-adjusted, March's order intake was roughly 184,000 annualized (vs. A.C.T.'s current build forecast of 213,000).

"Quoting activity appears to be strong, though fleets increasingly are asking for (and, we believe getting) '09 slots," Bear Stearns said. "Class 8 cancellations rose to 16% in March (vs. 9% in February). Our sense is that rise in cancellations was due to one large order cancellation."

Class 5-7 orders were 15,684, up 40% year-over-year (vs. up 99% year-over-year in February).

Class 5-8 builds remain weak (as expected), down 26% in March.

"We have been anticipating improved Class 8 orders in the second half of '08 -- not due to a back-half macro recovery, but rather into stabilizing freight fundamentals and ahead of the next emissions deadline," Bear Stearns said. "But over the last several weeks, two dynamics appear to be developing: (1) We have incrementally less conviction that the fourth-quarter '07 year-over-year improvement in freight tonnage is carrying over into the first quarter of this year, despite continued strength in ATA tonnage data, based on our channel checks. And ultimately, people buy trucks to move freight. (2) As noted above, we're becoming more concerned that fuel pressures are heightening; cost recoveries appear to be slipping, which squeezes carrier profitability. Historically, there's north of a 60% correlation between carrier profits and Class 8 orders. We think the truckers' first-quarter reports will be critical in determining the likelihood of monthly Class 8 orders exceeding 25,000 by year-end."

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