N.A. Big Rig Sales Cool, Still Strong; Medium Duty Jumps

BLOOMINGTON, COLUMBUS, IN — Two new reports show orders for big rigs in North America have eased a bit as the year gets closer to the end while a separate data shows sales of natural gas powered trucks in the U.S. are down this year from 2015.

The freight forecasting firm FTR has released preliminary data showing September 2015 Class 8 truck net orders totaled 19,460 units, 0.4 percent below August. 

The September order activity met expectations albeit with a higher anticipated cancellation rate for the second month in a row, according to the group, while Class 8 order activity has been consistent for the past five months. 

September 2015 follows the trend of previous months with a 21% decline year-over-year. However with heavy ordering early in the period, the past twelve months continue to annualize at a solid rate, now at 345,000 units. 

“After the wild order activity that started last October, the market has fallen back to a remarkable level of consistency. To have five months of orders be this stable in a stronger market is likely unprecedented,” said Don Ake, FTR vice resident of commercial vehicles. “Fleets loaded their orders into the backlog by March and OEMs have just been filling in the remaining slots since then.”

He said FTR doesn’t see the increased cancellation rate the past two months as being a cause for concern.

“The orders that were cancelled were placed seven months or more prior to this, to hold production slots. While the market is softening some with fleets now deciding they do not need these trucks, total backlogs remain strong,” Ake said.

Meantime, a separate report from commercial vehicle industry data provider ACT Research shows nearly the same number of booked Class 8 orders for September, 19,400, while Classes 5-7 posted 22,000 net orders.

Kenny Vieth, ACT’s president and senior analyst, noted that there appears to be a growing tiredness around new vehicle demand as 2016 approaches.

“We’re seeing a pullback from the recent white hot activity, and are moving toward a more sustainable pace for heavy truck demand.” Vieth said. “Seasonally-adjusted orders are well below build, backlogs are falling, cancellations are elevated, and inventories are high whether measured on an actual or relative basis.”

He said while the heavy truck market is poised for a correction, it is important to note the correction is occurring in a growing economy and in a period of healthy trucker profits.”

Concerning medium duty, Vieth said, “Collectively, the Classes 5-7 market experienced yet another strong month-over-month increase in orders. Individually, Class 5 enjoyed a 22% year-over-year increase, while Classes 6-7 grew 9%. Strength in the Class 5 market was concentrated in trucks, while step van activity drove the incremental gain in the Classes 6-7 market.”

Natural Gas Powered Vehicle Demand Down

Meantime, another report from ACT Research shows natural gas powered Class 8 truck and bus sales continue in the U.S., but at a slower pace compared to 2014.

The reason, according to the report, is the rapidly declining cost of diesel with making the return on investment (ROI) for adoption of natural gas less lucrative.

“With the fuel price differential narrowing, the ROI to convert from diesel to natural gas is moving in the wrong direction: payback periods are lengthening,” said Vieth. “However, this doesn’t mean the adoption of natural gas fuel has stopped or that there are no new developments that might lead to a future uptick in natural gas truck orders.”

According to Vieth ACT’s staff have spoken with a variety of industry participants.

“We’ve learned that despite the current fuel price differential, natural gas infrastructure continues to be built, albeit at targeted locations, and that previous natural equipment purchasers remain committed to the alternative fuel, seeing it as a long-term prospect, not just a short-term reaction to historically high, volatile diesel prices.” 

ACT Research sees growth for the adoption of natural gas as a fuel for heavy-duty vehicles in the U.S., but doesn’t expect to see double-digit sales expansion on the horizon in the next few years.

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