Preliminary North America Class 8 net order data shows the industry booked 10,200 units in July, an astonishing 81% year over year fall, according to ACT Research.
This is also down 21% from June and marks the lowest monthly order tally since February 2010. Net trailer orders also continued to plunge, according to data released about a week ago.
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.”
Recall, in early July we reported that Class 8 orders were down for the eighth month in a row, falling a stunning 70% in June to 13,000 units, according to FTR data. The figure was up 20% sequentially, but still followed a 71% decimation in May. Jefferies' Stephen Volkmann wrote in a note last month that the figures indicate a SAAR of ~178,000 Class 8 trucks and noted that the sequential growth compares to a sequential drop of 27% in May, when SAAR estimates were 139,000 units.
We will look to see if he updates his estimates based on July's data.
Vieth had commented in July:
"Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July of 2016. May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018."