Heavy Truck Industry Shows Signs of Recovery in the US image

The heavy truck industry in the US continues to recover as sales surpassed 20, 000 units since December.

Trucking companies have to buy around 20,000 trucks per month to replace the old ones manufactured by the Navistar International and Paccar companies. Since October net orders in North America have averaged 21,619 units per month and since December orders have stayed above 20,000 units. In February net orders increased 3.4% to 22,816 units, the highest level in 14 months.

Although the heavy truck industry has not fully recovered, investors are optimistic as home construction is increasing and carriers are the ones moving the automobiles and the construction equipment.

“There is a lot of optimism out there,” Kristine Kubacki, a St. Louis-based analyst at Avondale Partners LLC. “It’s really geared toward a back-half recovery.”

Last year analysts’ predicted Class 8 truck sales of 285,000 units, but it ended up at 273,036 units. This year Class 8 sales are expected to drop 12% to 240,719 units and retails sales dropped 18% during the first quarter compared with last year. Eric Starks, FTR’s president, said that orders run at an annualized rate of around 250,000 units and companies try to purchase new trucks before the peak shipping demand in summer.

“I expect orders to start moving down as we get into the summer,” Starks said. “If they hold up, that’s a great thing, but I don’t expect them to, based on traditional behavior. We need to see monthly orders above 25,000 to be really optimistic, but we’re just not seeing that right now.”

Source: Bloomberg