New truck orders better than expected: Market analyst

NEW YORK — Preliminary data for both heavy-duty and class 5-7 truck orders shows better-than-expected results in May thanks to international exports.

The post pre-buy market in North America is still slow, says transportation experts at Bear Stearns, but class 8 ordered were 15,000 units — about 3,000 to 5,000 more than the firm’s previous forecasts.

“Our best sense is that recent strength in export demand might be sustainable near-term due to 2008 emissions regulations in Mexico and Australia,” the firm wrote in an update to investors.

April truck export orders accounted for 33 percent of all net new orders. “To put those numbers in context, exports were only 11 percent of net new orders in 2006” — when North American fleets were buying trucks to avoid tough new emission standards that took affect in January 2007.

Class 5-7 net new orders for May were 14,700 (vs. Bear Stearns’ 10-12,000 forecast), which are down 36 percent from the same time last year.

“Arguably, class 5-7 orders are a ‘purer’ measure of economically-derived demand, given that there was a smaller pre-buy in class 5-7.”

Meanwhile, Bear Stearns predicts traditional truck OEMs could see more competition from up-and-coming manufacturers in India and China in the coming years.

A large top tier supplier told the firm “we could see more competition from Indian truck manufacturers in the European and U.S. markets during the next upturn.” Specifically, noted the source, Mahindra International and Tata Motors are working on heavy duty truck platforms that could eventually be exported to other markets.

In 2005 Mahindra entered into a joint venture with International Truck and Engine to make trucks and buses in India.