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Home » New orders for big rigs in June hit lowest levels in nearly six years, firm says
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New orders for big rigs in June hit lowest levels in nearly six years, firm says

July 7, 2016
DC Velocity Staff
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June is usually a weak month for new orders of heavy-duty trucks. Based on preliminary data released yesterday by consultancy ACT Research, last month's activity came in as advertised.

Orders of so-called Class 8 vehicles, the biggest on the road, fell to 13,100 units in June, ACT said. That is a 35-percent decline from June 2015, an 8-percent drop from May, and the lowest level since August 2010, ACT said. The June data represent the 16th consecutive month of year-over-year declines.

Class 5-7 vehicles, which include heavy-duty "Class 7" units that require a commercial driver's license to operate, booked 15,200 units last month, ACT said.

The combined totals of the two tiers were the lowest in nearly four years, ACT said.

Kenny Vieth, ACT's president and senior analyst, said the pace of orders "slowed in seasonal fashion into the first month of summer." The start of summer to the end of the third quarter traditionally marks the weakest period of the year for new orders, he said. By contrast, the fourth quarter is typically the strongest.

The pullback in medium-duty orders reflected a normal adjustment from recent strength, rather than an indication of sustained weakness, Vieth said. The volume of medium-duty orders from February and April ran well ahead well ahead of normal demand and were ripe for a correction, he said.

However, the same could not be said for the big rigs, which continued their order slippage despite increasingly easy year-over-year comparisons, Vieth said. Sluggish freight demand and excess capacity "continues to drive bad outcomes for new equipment demand," he said.

A. Rhem Wood Jr., who covers the transportation supplier segment for investment firm BB&T Capital Markets, said forecasts for new Class 8 orders in 2016 and 2017 of 236,000 and 217,000 units, respectively, are too optimistic, given the order run rate for 2016 is at about 187,000 units.

Given the weak freight environment, overcapacity, and a weak used-truck market, "we expect new Class 8 orders to remain under pressure for the near term, if not well into 2017," Wood wrote in a note yesterday.

Transportation Trucking Truckload
KEYWORDS ACT Research Co. BB&T Capital Markets
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