On February 4, 2019, Kenny Vieth gave an interview with CNBC's Nightly Business Report. At that time the commercial vehicle trucking industry was coming out of a record setting year, 490,000 heavy duty, class 8 orders. However, questions were being asked about industry capacity and the potential for high backlogs (300,000 at the time of interview) and cancelations coming in later 2019. At the time of this interview, there was a 3-month decline in new truck orders, considered a signal of a potential slowdown.
At that time, Kenny stated the industry seemed to be at capacity. "It's hard to add water to a full glass," Kenny said, meaning that in the current factory production set up, the backlogs (at the time the backlogs were twice the average) were not going to go away soon. Therefore, manufacturers were less likely to accepts large numbers of new orders.
Fast-forward to our July OUTLOOK and we saw 10,200 units ordered, down 21% from June 2018 and the lowest monthly number since February 2010. Looking to August, our latest N.A. CV OUTLOOK calls the market on the edge of a precipice. “Since the start of this demand up-cycle in late 2017, we have targeted this year’s third quarter as the point at which the industry was likely to see production rollover,” said Kenny Vieth, ACT’s President and Senior Analyst. He elaborated, “That targeting was largely derived from historical precedent, with historical peak-level build lasting between 13 and 15 months. For the current cycle, we date peak build rates to June 2018, so August represents the 15th month of peak-level production.”
This interview, given in February, still seems relevant when looking at the state of the industry, as well as what we might expect in the coming months.
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ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. Executive staff appointments include a seat on the Board of Directors of the National Association for Business Economics and Consulting Economist to the National Private Truck Council. Accolades include Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found atwww.actresearch.net.