Summary
Premier freight & truck sales forecasting firm FTR Associates is showing us North America Class 8 truck orders were 10,817 trucks - increasing month-to-month since May’s 7,400. As we noted a month ago, our financing work shows it’s more of a mini-prebuy in front of 2010-compliant engine full introduction.
Analysis
Freight trends have always been a direct indicator of miles operated and major factor with respect to truck / trailer purchases. My friend Eric Starks at FTR Associates is the best freight forecaster in the marketplace. I am not biased, even though I am a fellow-Hoosier and lived in Nashville (actually Gnaw Bone) - Indiana not Tennessee.
Of course all this happens with the backdrop of two major wildcards - financing and emissions regulations. These have whip-sawed us since 2000, but we believe too that this settle out better in line with freight levels starting in 2011. Emissions rules will be less an issue, while financing will continue to be tough.
In our work with financiers, we see orders continuing to be firm until the pre-2010 engines are spoken for. We are not seeing any big ramp up of truck production like in 2006, so the deliveries of these orders will extend into 2nd Quarter 2010. We then expect orders to not exceed that of mid this year. We still have a couple years worth of excess late model trucks in fleets that will have their lives extended, along with all of the used trucks that will fill any gaps.
Look for manufacturers Class 8 market shares to remain relatively unchanged with Navistar and Freightliner staying close to each other at 30% each with Paccar, Inc Peterbilt & Kenworth brands combining for almost 25%. Also noted in the article is that Class 6 / 7 orders are showing life again, albeit from very depressed levels.
At any rate, we still agree that we are in the trough with continued signs things are slightly positive.
Jay Thompson consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
