A favorable freight market for trucks continues to drive equipment sales to record levels. Preliminary North America Classes 5-8 net truck order data show the industry booked more than 70,000 units in 2018’s third month, reports ACT Research.
“For only the fourth time on record and for the second time in Q1’18, medium duty and heavy duty orders combined to exceed 70,000 units in a month, as activity in both the medium and heavy duty vehicle markets remained strong,” said Kenny Vieth, ACT’s president and senior analyst.
March marks the last of the seasonally strong Class 8 order months before decelerating through summer, added Stifel Transportation analyst Michael Baudendistel in a note to investors—and if the March order total does indeed mark the end of a “torrid” six-month order season, “it went out with a bang.” Among the note's bullet points, highlighted in bold text: Running out of ways to describe just how strong the orders are.
“Adding to the factors of rising freight traffic and rates, we believe that the rapid filling of available build slots encouraged fleet owners to put orders in quickly,” said Baudendistel.
ACT’s preliminary look for March shows that orders rose 55% year-over-year, 11% above February’s order intake.
March orders capped the best Classes 5-7 order quarter since Q1’06, when the industry was in the throes of EPA’07 prebuying.
“As March is traditionally the strongest month of the year for medium duty orders, seasonal adjustment takes a bite out of the month’s intake, dropping the relative volume to 23,100 units,” noted Vieth.
For Class 8, March’s orders more than doubled their year-ago volume, rising to 46,900 units—the third consecutive month in which Class 8 orders came in above 40,000 units, ACT reported.
“And, all this before the ELD mandate was fully implemented,” added Vieth.
Net orders in March likely increased the Class 8 backlog by 19,000 units to roughly a “whopping” 197,000 units, Baudendistel pointed out. Assuming that industry production rates rise to 1,400 units per day and there are 62 working days/quarter, that 197,000 Class 8 units in backlog represents 6.8 months of backlog.
“That would put backlogs out through the end of October,” he said. “Of course, most carriers have preferred OEMs, and once that is considered, it is easy to see why some fleets may not get the trucks they want delivered by this fall.”
The upshot: OEMs with less backlog might have an opportunity to pick up market share.
Complete industry data for March, including final order numbers, will be published in mid-April.