Preliminary November truck orders for Class 8 were 17,400, down 44% year-over-year and in line with Bear Stearns’ "mid- to high-teens" forecast.
“Our sense is that we likely saw continued strong demand from Mexico and other export markets,” Bear Stearns said, adding that in October, orders from export markets accounted for roughly 40% of total net orders. “Our sense is that those orders are for pre-mandate engines and that OEMs are likely using them to soften some of the downturn in '07.”
Class 5-7 net new orders for November were 13,500 (vs. Bear Stearns’ "mid- to high-teens" forecast), down 12% year-over-year (vs. down 36% year-over-year in October).
“Class 5-7 tends to be lumpy, although this was the worst November in six years (November 2000 was 12,385),” Bear Stearns said. “We continue to believe investors greatly underestimate the magnitude of the ‘05/'06 pre-buy. The average age of the public TL fleet declined from roughly 28 months in '02 to 17 months at year-end '05. Conservatively, we project it declining to 14 months by year-end '06. There have been no other secular changes of which we're aware in the end market that would drive a secular decline in fleet ages.
“Year-to-date, the group’s performance has been astonishing -- particularly in the face of weakening truck fundamentals and a highly-visible downturn within six months. We've struggled with the disconnect between the end market and the OEMs for some time. Our best sense is, it's a case of, ‘It doesn't matter 'til it matters.’ ”