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Class 8 Heavy Duty Truck Orders Plunge 79% In August Marking 10th Straight Month Of Declines

Courtesy of ZeroHedge View original post here.

Class 8 Heavy Duty Truck Orders Plunge 79% In August Marking 10th Straight Month Of Declines

Every month, analysts are hopeful that Class 8 orders are on the verge of rebounding and every month so far in 2019, orders have continued to crash. Such was the case again in August, according to data supplied by Bloomberg and ACT Research.

According to Buckingham analyst Neil Frohnapple, preliminary Class 8 truck orders were down 79% in August to 10,900 units. 

Total Class 5-7 orders were 18,800 units for the period, marking a fall of 22% Y/Y, he also noted. 

Frohnapple wrote in a note to clients: “Overall, Class 8 net orders were slightly below our expectations as we were anticipating net orders in the low- to mid-teen unit range for the month of August.”

He also noted that August marked the tenth consecutive month of Y/Y declines after orders exceeded expectations in the seasonally weak third quarter last year. The robust demand last year was a result of fleets and dealers placing orders earlier than normal to secure build slots for 2019, he said. 

Continuing declines for Class 8 orders in 2019 are a result of weaker freight indicators – traditionally seen as a good gauge of the overall U.S. economy – and declining used Class 8 truck prices. 

Frohnapple’s outlook for September is also grim. He continued: “We anticipate that Class 8 net orders will remain depressed and in the low- to mid-teen range for the month of September as the market continues to correct.”

Last month, the industry booked 10,200 units, an astonishing 81% year over year fall, according to ACT Research

July’s number was also down 21% from June and marked the lowest monthly order tally since February 2010. Net trailer orders also continued to plunge, according to data released last month. Updated net trailer order data for August will be available within days, at which point we will update these figures.  

In addition to Frohnapple, other industry experts are not exactly optimistic about the short term future of the industry, either. Kenny Vieth, ACT’s President and Senior Analyst said in late July that heavy truck and trailer industries would be heading for a market correction in 2020. He stated: 

“Data that support our forecast of an impending market correction continue to mount, with the biggest driver of the change for both Class 8 and trailers being the continued building of new equipment inventories in 2019 that will require right-sizing in 2020. Since March 2018, ACT’s forecasts have targeted 2019’s third quarter as the point at which the supply of Class 8 tractors and demand for freight services would likely tip so far as to break the current period of peak vehicle production, as demand reverts to the mean. Current data and anecdotes make a strong case that the call for a Q3 inflection remains intact.”

In early July we reported that Class 8 orders fell a stunning 70% in June to 13,000 units, according to FTR data. This followed a 71% decimation in May.

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