Heavy duty truck orders were soft in June, as motor carriers concerned by rising truck prices, tight financing and a slowing economy kept their wallets shut.
Preliminary estimates for Class 8 heavy truck net orders approach 16,500 units for June, according to ACT Research, falling from about 18,000 net orders in May.
Class 8 tractor orders hit a “soft patch” this spring that is likely to last into the summer, typically a slow season for truck purchasing, ACT Research said.
Several factors are affecting orders, said Kenny Vieth, president of the firm. Higher new and used truck prices are among them, but low confidence is key.
“The issue appears to boil down to credit-buying truckers’ confidence in the economy relative to the risk of taking out a sizeable loan to buy a truck,” he said.
The slide in Class 8 net orders is a big change from last year. Net orders hit a six-year peak in December, capping a surge in orders that began last August.
That surge in orders created a backlog at U.S. truck manufacturers, which meant additional delay as orders were translated into actual production and sales.
The decline in truck orders accompanied slipped as truck tonnage fell from the previous month in April and May, according to the American Trucking Associations.
However, Vieth thinks the drop in net orders is related more to the higher cost of equipment, which means motor carriers must finance more of a truck’s cost.
Truckers who six years ago needed to borrow $40,000 to $50,000 to finance a $90,000 truck now must borrow $90,000 to $100,000 to finance a $120,000 truck.
That means some carriers are buying fewer trucks than they trade, a trend carrier executives say is taking a bigger bite out of capacity as trucks aren’t replaced.