By now, you may be aware that October and November new Class 8 orders were through the roof. This 2 month period is the strongest weve seen in 8 years. Why now? What has changed in the economy to prompt this massive increase?
At a foundational level, demand for freight continues to increase in step with the steadily improving economy. Fleets have been expanding since earlier this year, ensuring they have the trucks necessary to fulfill their shipping responsibilities.
Outside of economic fundamentals, timing is a factor. The end of the year is traditionally a strong period for orders, since buyers want to lock in pricing before inevitable increases are activated later in the model year. Also, buyers want to lock in their build slots, given that manufacturing capacity is tight. Whenever fleets have strong confidence in the economy, they increase their bets on these two factors. With an election year behind us, and the annual federal budgetary process somewhat less theatrical this year, confidence is increased.
NADA has pointed out that trade-in values are also a factor. 2014 has been an incredible year for used truck values, with the price of the average used truck setting multiple records over the past 12 months. NADA has predicted that this record pricing will cool mildly as the supply of trucks built post-recession enters the secondary market. The value of a fleets inventory is probably at its peak right now or, perhaps more accurately, at an extremely high plateau.
Since the trucking industry is a leading indicator of general economic health, strong new truck orders paint a positive picture of conditions in 2015.