April Class 8 truck orders hit 25-year low

Truck hauling other trucks

Preliminary orders for Class 8 trucks plummeted to a 25-year low in April, the first full month of the coronavirus pandemic that impacted wide swaths of the economy, including new truck production.

ACT Research reported 4,100 orders of new tractors for the month, 72% below the same month a year ago and down 46% from March. ACT said it was the lowest month since September 1995 when, after accounting for cancellations, net orders were negative.

FTR Transportation Intelligence reported a preliminary count of 4,000 orders, 73% less than a year ago and 44% below March. FTR said Class 8 orders over the last 12 months total just 160,000 units. By contrast, as recently as the summer of 2018, fleets ordered more than 50,000 trucks a month for consecutive months.

The payback for production and retail sales of nearly 600,000 Class 8 trucks in 2018 and 2019 arrived with brutal swiftness. Year-over-year orders declined in 11 of 12 months in 2019. Manufacturers laid off workers and adjusted build rates as is typical in a down cycle.

Then the health crisis began, forcing the shuttering of truck plants globally for two weeks in March and all of April. Some production is restarting this month, but at further reduced line rates.

“Given broadly halted economic output leading to a sharp drop in freight volumes and rates, as well as more empty miles from fragmented supply chains further impacting carriers’ profitability, a negative order number was within the realm of possibilities,” said Kenny Vieth, ACT president and senior analyst.

Rather than cancel orders already being produced, fleets are moving close-in deliveries to later build dates, Vieth said.

FTR said its tracking found some canceled orders in April but expects a rebound to around 10,000 orders in May.

After that, orders depend on the speed and strength of the economic recovery, said Don Ake, FTR vice president of commercial vehicles.

“Despite all the economic calamity and a significant number of cancellations, Class 8 orders managed to generate a gain in April,” Ake said. “There still are a few fleets that need new trucks. We expect retail sales to be somewhat higher than expected in April.”

The industry backlog of trucks waiting to be built in North America was around 98,000 based on preliminary April numbers, and dealers have “plenty of inventory,” Vieth told FreightWaves. 

ACT’s current estimate for 2020 retail Class 8 sales is 127,500, less than half of the Class 8 retail sales in 2019.

“Fleets will remain extremely cautious going forward, but we expect orders to modestly increase as the freight markets recover,” Ake said. “We have already seen some signs of life in refrigerated freight and expect improvement in dry van freight soon. The industry recovery will begin in May, but it will be gradual, just like the overall economy.”