Commercial market continues recovery path

June 8, 2011

Improved demand across the entire heavy-duty vehicle market is reflected in the most recently available data, according to ACT Research Co. (ACT). It is readily apparent that the stage has been set for a long run-up in demand across the medium- and heavy-duty truck, and commercial trailer segments.

The most recent release of the ACT North American Commercial Vehicle Outlook reflects solid fundamentals supporting the upcycle in the commercial vehicle market. These include improved fleet financial performance, some improvement in credit availability, as well as pent-up demand from long-delayed equipment replacements and upgrades across the entire fleet spectrum.

“While the pace of economic growth eased slightly in the first quarter of 2011, our forecast concludes that the U.S. economy has shifted into a self-sustaining recovery mode," says Sam Kahan, ACT’s chief economist. “The recovery in the commercial vehicle sector is solidly underway, and the overall constraining factor for 2011 might actually be the industry’s ability to build, rather than truckers’ demand for vehicles.”

A preliminary reading of heavy-duty Class 8 commercial vehicles net orders for North American markets fell from April’s high water mark, but remained strong. ACT says net orders were up 85% from year ago May. (Preliminary net order numbers are subject to revision and are typically accurate to within 5% plus or minus.)

“May represents the seventh consecutive month of orders above the 24,000 unit level, a clear sign of elevated Class 8 demand," says Steve Tam, ACT's vice president of the commercial vehicle sector.

"Though May had the lowest order intake of the last three months, orders were booked in excess of a 365,000 unit annualized rate from March to May. Industry backlogs, which stood at just over 125,000 units at the end of April, likely rose as May orders outpaced OEM planned production for the month.”

“So far, trucks have yet to show any reaction to the recent rash of disappointing economic news," says Tam. "Their freight remains strong, exceeding hauling capacity at this time. Carriers are thinking about their future prospects when making significant capital expenditures on new equipment.”

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