March Class 8, MD, orders break more records; Production slots closing fast

NEW YORK — Preliminary class 8 net orders in North America hit another all time high last month, solidifying expectations that 2006 will be the biggest truck sales year in history.

According to leading market analyst firm Bear Stearns in New York, class 8 new orders for March were 49,900, up 38.6 percent year-to-year compared to February.

The firm’s Truck Equipment Group believes the class 8 pre-buy “clearly continues to drive the upside.” (read more on this in the top TodaysTrucking.com headline story: “Onward & Up.”)

Assuming orders remain in the 40,000 range near term, Bear Sterns predicts there is one month of demand before the 2006 backlog sells out. The company points out that technically, the EPA’s 2007 engine rules states that non-compliant engines cannot be made after January 1, 2007. But if a truck OEM has the engine in inventory on that date, the rules allow the non-compliant truck to be assembled. Bear Stearns’ contacts estimate there will be 30-45 days excess inventory of engines at year-end, suggesting roughly 30,000 to 45,000 of potential upside orders.

The medium-duty market flexed some muscle as well. Class 5-7 new orders for March were 35,500, about 10,000 more than Bear Stearns’ initial projections. March medium-duty orders were 24 percent better than the all-time high of 28,666 and improved sharply from 19,449 in February.

After posting soft order trends throughout 2005 (down 5.9 percent for the year), Class 5-7 orders have generally firmed since — up 27.7 percent year-over-year in the last three months.

“We attribute at least part to medium-duty customers’ pre-buying some trucks ahead of the January 1, 2007, emissions standard,” Bear Stearns concludes. “While we previously didn’t expect much of a medium-duty pre-buy (given how long trade cycles tend to be for these vehicles), we believe the recent strength has been driven by leasing companies, as well as one or two OEMS’ encouraging dealers to sharply increase stock inventory of 2006 model-year trucks ahead of the Jan. 1, emissions deadline.”