COLUMBUS, Ind. — Good things are in store for the Class 8 truck market, according to ACT Research. In its Commercial Vehicle Dealer Digest, ACT reported that Class 8 net orders were soft in May, as full 2021 backlogs and fully opened 2022 order books constrained activity.
“For Class 8, after a torrent of orders from October to March, orders moderated in April, before falling to a nine-month low in May,” said Kenny Vieth, ACT’s president and senior analyst. “The order lines on the Dashboard graph illustrate the current rollover in the trend. A drop in the order trend preceded the opening of subsequent years’ orders in each of the last two cycles, with significantly higher orders booked ahead of the second year of the cycle. Given recent historical precedent, we would expect orders to rise materially in coming months.”
Vieth noted that, although he expects orders to jump during the third quarter of 2021, there are two caveats.
“First, through all but the most recent cycle, OEMs have typically not opened out-year order books until September-October,” he explained. “Second, at a recent conference, an OEM executive indicated that his company was at least contemplating some type of allocation system to best serve all of their customer constituencies in challenging market conditions.”
In addition, ACT’s mid-year Transportation Digest indicates the economy, for freight, and for equipment utilization are “about as good” as the company’s analysts have ever seen.
“Near term, volumes will be dictated by OEM and supplier capacity; the market will take as many trucks, tractors, and trailers as the manufacturers can make for this year and deep into next year,” Vieth said. “We’ve been on a wild 12-month return-to-near-normal ride, but having reached the ‘it’s as good as it gets’ stage, the next question company management and ACT’s clients are asking is, ‘When does it all end?’”
The answer, Vieth said, pointing to the trajectory of ACT’s forecast, is “not any time soon.”
“But even as a theoretical exercise, it’s worthwhile to run through the array of signals to watch for early, actionable signs of a pending change in direction,” he said. “Those include considerations like the yield curve, commodity prices, stock prices, purchasing managers’ surveys, spot freight rates, and ACT Research’s Class 8 Tractor Dashboard.”
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