Class 8 Orders Fall To Lowest Level Since October ’16, But Still “No Reason To Panic”

Little Rock, Arkansas – FTR reports preliminary North American Class 8 orders for January 2019 dropped 26% M/M to the lowest since October 2016 at 15,600 units, while ACT Research tallied the preliminary number at 15,800.

This year’s January order activity was down 67% versus last year and is the worst for the month since 2010. The low Class 8 order number was not entirely unexpected, as the great majority of fleets already have all their orders in for 2019 and don’t need to place any more orders for a while.

Backlogs are expected to fall, but should remain over 70% higher than a year ago.  Class 8 orders for the past 12 months have now totaled 402,000 units.  “With near-record backlogs in both the medium and heavy-duty vehicle markets, order activity continued to moderate in January. During the month, NA Classes 5-8 vehicle orders fell to an 18-month low 39,200 units,” said Kenny Vieth, ACT’s President and Senior Analyst.

Don Ake, FTR vice president of commercial vehicles, tried to put the declining order totals in perspective. “Orders had to fall below 20,000 units at some point,” he said. “There were record breaking orders placed last July and August, and this is the payback for that volume. Even with the weak January numbers, over 330,000 trucks have been ordered in the last nine months, so demand for trucks in 2019 remains strong.”

Ake noted the market is at “more of a resting point than a turning point,” because there is “an enormous amount of orders in the backlog.” He said the key will be how many trucks get built and when. Ake reassured, “The fundamentals of the economy and freight growth remain solid, so there is no reason to panic.”

The production rates the first few months of the year will be a better indicator of Class 8 demand than current orders are. We do expect the cancellation rate to remain elevated, as fleets move their orders around in the backlog. Order rates are expected to remain suppressed for a few months, but build rates and retail sales are forecast to climb. “

Vieth said he expects the story of 2019 to be the balance between “Softening freight growth and strong Class 8 capacity additions,” but “January seems a premature start to that tale.”

Final January totals are expected later this month.

(featured image courtesy of Mack Trucks)

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