Class 8 net new orders were 30,120 in April, down 42.3% from March, according to ACT Research.
According to Bear Stearns, it appears that very few orders are slotted for early 2007, when a limited number of 2007 trucks with 2006 engines will be available, but “OEMs will hoard these to get the best pricing.”
Class 5-7 orders were modestly weaker than expected at 20,419 in April, up 17% year-to-year but down 49% from March.
“Although the medium-duty backlog only stretches out roughly into September, we believe that March's strength in orders was unsustainable, and driven by 1-2 OEMs pushing dealers to load up on stock inventory ahead of the EPA deadline,” Bear Stearns said. “We’d continue to lighten up in truck equipment. We continue to believe 2006 will be another strong year from a production standpoint, with the second half of ’06, in all likelihood, posting record production months.
“However, monthly orders drive the stocks, and our best sense is that, with Class 8 orders likely to remain under pressure through year-end, it'll be increasingly difficult for the Class 8 names to outperform - particularly as we enter the typical order season in September when we expect order intake to still be weak. We think the market will be even more disappointed when Class 8 orders don't rebound later this year.”