North America Class 8 Orders Rise Again in July 2020

Orders rose compared to June and were nearly double that of orders in July 2019.

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Preliminary North American Class 8 orders rebounded in July to about 20,000 units. This was a 28% increase over June 2020 as well as an increase over July 2019 orders. According to FTR, Class 8 net orders for the last 12 months now total 168,000 units. 

ACT Research notes Classes 5-7 market saw orders slip to 16,700 units, down 6% month-over-month and 3% below their year-ago July volume.

“Preliminary data show that July orders for medium- and heavy-duty vehicles jumped to a six-month high,” says Kenny Vieth, ACT’s President and Senior Analyst. He continues, “Less than a week ago, we learned that the U.S. economy was 9.5% smaller in Q2 than it was in Q1 and 10.6% below its end of 2019 level.

“Additionally, when the COVID began to bite in late February, there was a strong case to be made that the trucking industry was suffering from lingering overcapacity that was still putting downward pressure on freight rates, and by extension, carrier profitability.”

FTR says the strengthening truck market that occurred in June and July resulted in further improvement for new truck orders. Demand for new trucks was better than expected, but uncertainty around increasing coronavirus case counts and Congressional action on unemployment benefits may dampen the market as we move into fall. 

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Jonathan Starks, Chief Intelligence Officer, comments, “As we hit the height of summer demand, the freight markets showed strength and resilience and that led to additional orders for trucks. The order activity for both June and July was more robust than expected and is good news for the equipment producers. However, despite the increasing orders, FTR still expects the Class 8 market to maintain a slow, steady recovery.”

“The freight markets sustained a traumatic decline of volumes at the start of the pandemic and consumer demand, on an absolute basis, will remain weaker as we deal with high levels of unemployment and a Congress that has been unable to foster a bi-partisan solution to stimulate demand. The OEMs received a needed boost from July orders, activity that will help keep the industry moving in an upward direction.”

“The context of rising rates and improving carrier profits adds perspective to what is now occurring in Class 8 orders: Supply matters. With many drivers (and trucks) sidelined, there is now insufficient available capacity for rebounding freight volumes. There is a strong relationship historically between carrier profits and equipment demand,” says Vieth. 

Regarding the medium-duty market, he says, “Unlike Class 8, the medium-duty market did not swoon sharply through the worst of the shutdown. And, while orders were down on a nominal basis, seasonal adjustment boosts July’s Classes 5-7 orders to a five-month high.”