Class 8 and Class 5-7 net new orders were revised up 6% and 13%, respectively, for April.
Class 8 orders were 20,099, up 77% year-over-year (vs. up 18% year-over-year in March). Seasonally adjusted, April’s order intake was roughly 237,000 annualized (vs. A.C.T.’s current build forecast of 213,000).
“Quoting activity appears to be strong, though fleets increasingly are asking for (and, we believe getting) ‘09 slots,” Bear Stearns said. “Notably, Class 8 cancellations declined to 6% in April (vs. 16% in March).”
Class 5-7 orders were 16,095, up 14% year-over-year (vs. up 20% year-over-year in March).
“Arguably, Class 5-7 orders are a ‘purer’ measure of economically derived demand,” Bear Stearns said.
Class 5-8 builds improved year-over-year, up 13% in April, with strength being driven by Volvo (up 306% year-over-year), Navistar (up 25% year-over-year), and Freightliner (up 15%).
“We have been anticipating improved Class 8 orders in the second half of ‘08 - not due to a back-half macro recovery, but rather into stabilizing freight fundamentals and ahead of the next emissions deadline,” Bear Stearns said. “This has been a tough earnings season from a fundamental perspective: (1) We have incrementally less conviction that the fourth-quarter ’07 year-over-year improvement in freight tonnage is carrying over into 2008, as demonstrated by slipping Cass Shipment Data in recent months, plus March’s ATA tonnage index which declined 3% sequentially. And ultimately, people buy trucks to move freight. (2) We’re becoming more concerned that fuel pressures are heightening; cost recoveries appear to be slipping, which squeezes carrier profitability.”