Brisk truck sales may indicate pre-buy
May 5, 2004 3:29 PM
Heavy-duty truck sales are on the rise, according to a report released by Americas Commercial Transportation Research Co. yesterday. In April, new orders of Class 8 trucks climbed to 38,000, a 14.5% increase from the month before — and a 146% jump from a year earlier.
Backlog-to-build ratios are low, indicating that manufacturers are producing almost as fast as they’re taking orders. This reduces the risk of order cancellations.
“Around the edges, we’re hearing that OEMs generally aren’t accepting orders yet for 2006, and that truckers so far in this cycle have been placing ASAP orders instead of longer-term orders,” states a release from Bear Sterns & Co., an investment firm.
Additionally, Bear Sterns concluded “few-to-no pre-buy orders appear to be in the data so far.” Industry analyst Martin Labbe disagrees.
“The normal replacement cycles of fleets are being accelerated— that is pre-buy,” Labbe told Fleet Owner. “The uncertainty of dealing with 2007, as well as the experience with the recent 2002 equipment is causing carriers to be cautious about problems that may or may not occur.”
However, a strong economy and mounting truck capacity demands also play a large role in brisk truck sales. There are indications that the success truck manufacturers are enjoying now may not last forever.
“At least from a historical context, it certainly feels like we’re close to a peak— seasonality and pre-buy trends aside,” states the Bear Sterns release.
Preliminary Class 5-7 new orders dropped 14.6% to 21,000 from March, but scored a 46% increase over April 2003. Despite the lagging sales, the market is solid, according to Labbe.
“There is a seasonal aspect of the Class 5-7 market in bus and dump trucks, agricultural market,” Labbe said. Bear Sterns was contacted but not able to comment at press time
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