As freight forecasters and analysts release preliminary reports Class 8 commercial truck sales in North America during July, the numbers look promising, outshining the first six months of 2020.
In an Aug. 4 statement, ACT Research noted that its State of the Industry: Classes 5-8 Vehicles report shows July orders of 20,300 units, up 27% from June, and up 98% from a very easy year-ago comparison. In contrast, the report reflected a drop in the Classes 5-7 market, with orders slipping 16,700 units, down 6% month over month and 3% below volume recorded in July 2019.
“Preliminary data show that July orders for medium- and heavy-duty vehicles jumped to a six-month high,” said Kenny Vieth, president and senior analyst for ACT Research.
Vieth noted that during the last week of July, reports showed the U.S. economy for the second quarter of 2020 had dropped 9.5% from the first quarter and was 10.6% below the ending level for 2019. In addition, he said, when COVID-19 began to impact the market in late February 2020, a lingering overcapacity continued to put downward pressure on freight rates and carrier profits.
“The context of rising rates and improving carrier profits adds perspective to what is now occurring in Class 8 orders: Supply matters,” Vieth said. “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.”
FTR also released preliminary forecasts Aug. 4, noting that net orders of Class 8 vehicles showed significant improvement in July compared to June — and the figure was more than double orders for July 2019. Net Class 8 orders for the past 12 months now total 168,000 units, the report shows.
While the strengthening truck market seen in June and July resulted in improvement for new truck orders and demand for new trucks, experts at FTR warned that uncertainty caused by rising COVID-19 case counts and Congressional action on unemployment benefits may dampen the market this fall.
“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,” said Jonathan Starks, chief intelligence officer for FTR. “However, despite the increasing orders, FTR still expects the Class 8 market to maintain a slow, steady recovery.”
Starks also pointed to the effects of the COVID-19 pandemic, teamed with high levels of unemployment, on the economy.
“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,” he said. “The OEMs received a needed boost from July orders, activity that will help keep the industry moving in an upward direction.”
Final data from both ACT Research and FTR will be released later this month.