Heavy-duty orders start to yield

NEW YORK — North American class 8 orders in April but have begun to slow for the first time this year.

New heavy-duty class 8 net new orders hit 30,120 last month — down 42.3 percent from March, reports the transportation division of market forecasters 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. However we think OEMs will hoard these to get the best pricing,” states the firm’s April 2006 report.

Bear Stearns’ projected monthly class 8 net
new orders through Jan 2007

Technically, the EPA’s rule is that non-compliant engines cannot be made after January 1, 2007. However, says Bear Stearns, if a truck OEM has the engine in inventory on that date, the rules allow the non-compliant truck to be assembled.

“Our industry contacts estimate there will be 30-45 days excess inventory of engines at year end. This suggests roughly 30,000 to 45,000 of potential orders in early 2007. Our sense is that OEMs may be holding on to these last production slots as their value will surely increase as we draw closer to the Jan.1 emissions deadline. Accordingly, we expect continued sequential downticks, and weak year-over-year comparisons, as the year progresses.

“We continue to believe that the Class 8 monthly net new orders will go lower, and stay down longer, than what’s reflected in general market expectations,” the report states.

Class 5-7 net new orders, modestly weaker than expected, were revised down 9.2 percent from preliminary estimates — reaching 20,419 units — a 49 percent decline 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,” says Bear Stearns.

Class 5-8 builds were down a combined 2 percent year-to-year in April.