FUELING YOUR MIND FOR THE ROAD AHEAD
FUELING YOUR MIND FOR THE ADVENTURES AHEAD
FUELING YOUR MIND FOR THE ADVENTURES AHEAD

November Truck Orders Rise but Class 8 Vehicle Production Continues to Slide

December 05, 2016 by Clarissa Hawes

Builders of heavy-duty trucks can expect a significant drop in production for 2017 primarily due to lower freight volume versus dealer inventory, according to Kenny Vieth of ACT Research.

“In a nutshell, there are too many trucks and not enough freight,” Vieth told Trucks.com.

J.P. Morgan Securities analyst Ann Duignan estimates that production of trucks in the heaviest Class 8 weight segment will fall 28 percent from 2015 to just 232,000 units this year.

The rate of decrease will likely slow next year. Duignan estimates Class 8 truck production will drop 14 percent in 2017 to about 200,000 trucks.

But the industry did get some good news in November.

Orders for Class 8 trucks last month reached 19,500 units, up 16 percent from the same month a year earlier, Duignan said Sunday in a report to investors.

The positive growth in orders last month reversed 20 consecutive months of year-over-year declines, Duignan said.

The trucking industry is facing a new federal regulation set to take effect in a year that could support sales, Vieth said.

The industry has until December 2017 to equip heavy-duty trucks with electronic logging devices, or ELDs, which record how much time a driver spends behind the wheel by capturing movement of the vehicle.

The implementation of ELDs is an “effective reduction of capacity.”

“By eliminating logbook cheating, it allows freight rates to rise so truckers shouldn’t have to drive as many miles to get better rates,” he said.

“So, if you have five guys running an extra 20,000 miles a year illegally, that’s the equivalent of one additional truck that is required,” Vieth said.

Although some truckers claim they will retire before running e-logs, Vieth said he “doesn’t buy the notion that a significant number of drivers [will] leave the industry.”

Meanwhile, sales of medium-duty trucks, which weigh less than 26,000 pounds, are expected to rise “incrementally in 2017 from 2016 numbers,” Vieth said. He predicts that Class 5-7 medium-duty trucks will experience a 3 percent growth in the coming year, from 238,000 in 2016 to 247,000 in 2017.

“The reason for the predicted increase in medium-duty trucks in 2017 is that if President-elect Trump makes good on his campaign promises, these medium-duty trucks are going to be needed to haul machinery and other materials needed for infrastructure projects,” he said.

“Key drivers in this economy are the consumers and the housing market,” he said. There are a lot of vocation trucks that touch housing and should give medium truck sales a significant boost in the coming year.

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