Preliminary Class 8 order data for September is starting to trickle in and, like the data preceding it so far this year – it’s ugly.
Class 8 orders were crushed 71% in September, reaching 12,600 units, according to Baird and Morgan Stanley.
This follows a 79% plunge in August.
This makes September the 11th consecutive month of YOY order declines and the 9th consecutive month of orders below 20,000.
Class 8 orders are often seen as a pulse on the U.S. economy. Morgan Stanley analyst Courtney Yakavonis wrote in a note that she expects YOY order declines to continue into the year’s end. But Baird analyst David Leiker said he was gaining “increased confidence” that a bottom in declines was likely near – but that’s a story we have heard from ACT Research analysts all year and orders just continue to collapse.
The blame continues to fall on the trade war.
“Little has changed since August with respect to the freight market and freight rates, while uncertainties surrounding trade and tariffs continue to weigh on truck buyers’ psyches,” said Steve Tam, ACT vice president, according to FreightWaves.
Don Ake, FTR vice president of commercial vehicles simply said: “Class 8 orders are stuck at the bottom of the cycle.”
As of September, the rolling 12-month average for orders is about 214,000.
“All the orders needed for 2019 were placed months ago and fleets are now adjusting delivery dates and finalizing requirements,” Ake continued.
If there’s one silver lining, it is that the slowdown continues to wear away at the backlog of trucks that are awaiting assembly. ACT predicts that the number of unbuilt trucks has fallen to 135,000, down from 151,000 in August.
The number of available used trucks continues to rise, leading to lower prices in that sector. Volvo trucks and Mack trucks are both taking two down weeks at their Virginia and Pennsylvania factories this quarter.
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