“It’s Probably Nothing”: Truck Orders Plunge 37% As Unsold Inventories Soar Most Since 2007
When we last looked at order of heavy, or Class 8, truck one quarter ago – that all-important, forward looking barometer of domestic trade – we said that even with 2015 in the history books, and as we start 2016 where the base effect was supposed to make the annual comps far more palatable, the latest, January data, as abysmal: “the drop continues to be one of Great Recession proportions, manifesting in yet another massive 48% collapse in truck orders in the first month of the year as demand appears to have gone in a state of deep hibernation.”
Fast forward one quarter when we now have another three months of Class 8 truck data, and unfortunately the orderbook has gone from bad to worse. As the WSJ reports, orders for new big rigs plunged and inventories of unsold trucks soared to their highest levels since just before the financial crisis, as uncertainty about future demand and a weak market for freight transportation weighed on truck manufacturers.
About 67,000 Class 8 trucks are sitting unsold on dealer lots, after sales in March dropped 37% from a year earlier to 16,000 vehicles, according to ACT Research. Class 8 trucks are the type most commonly used on long-haul routes. Inventories haven’t been this high since early 2007, said Kenny Vieth, president of ACT.
The number of March orders was the lowest since 2012.
The problem according to the WSJ? Simply not enough freight, or as some may call it, trade: “It boils down to, at present, there are too many trucks chasing too little freight,” Mr. Vieth said.
As the Journal adds, companies that placed large orders in late 2014, only for customers to move less freight than expected last year, are reluctant to buy more vehicles now, analysts said.
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