ACT Research Notes Class 8 Orders Down in 2012In the Class 8 truck market, weak orders persisted through June, while activity in the Classes 5-7 markets remained generally unchanged. This updated status of the North America commercial vehicle market was included in the State of the Industry report, recently released by ACT Research Co.

“Class 8 backlogs continue to be consumed at a rapid rate,” said Kenny Vieth, president and senior analyst at ACT said, “With the order shortfall and backlogs becoming increasingly tight, most near-term build plans have been adjusted downward.”

Meanwhile, Vieth said that Classes 5-7 orders in June remained consistent, but there is very little backlog cushion if orders slow from current levels. Several factors are affecting orders, said Kenny Vieth, president of the firm. Higher new and used truck prices are among them, but low confidence is key.

“The issue appears to boil down to credit-buying truckers’ confidence in the economy relative to the risk of taking out a sizeable loan to buy a truck,” he said.

The slide in Class 8 net orders is a big change from last year. Net orders hit a six-year peak in December, capping a surge in orders that began last August. That surge in orders created a backlog at U.S. truck manufacturers, which meant additional delay as orders were translated into actual production and sales.

The decline in truck orders accompanied another economic slip as truck tonnage fell from the previous month in April and May, according to the American Trucking Associations. However, Vieth thinks the drop in net orders is related more to the higher cost of equipment, which means motor carriers must finance more of a truck’s cost.

“Truckers who six years ago needed to borrow $40,000 to $50,000 to finance a $90,000 truck now must borrow $90,000 to $100,000 to finance a $120,000 truck. That means some carriers are buying fewer trucks than they trade, a trend carrier executives say is taking a bigger bite out of capacity as trucks aren’t replaced.”

Class 8 New Truck Orders Down in June 2012

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