ACT Research: Class 8 Production Outpaced Weak Sales in January

According to ACT Research’s latest State of the Industry: NA Classes 5-8 Report, Class 8 inventories rose 3,400 units month-over-month in January, as production outpaced expectedly weak sales.

“With the rise in inventory and weak sales, the Class 8 seasonally adjusted inventory-to-retail sales ratio rose to 3.9 months, which is the second highest reading in history,” said Kenny Vieth, ACT Research’s president and senior analyst. “Additionally, our backlog analysis continued to show good fill rates relative to build plans in the first half of 2020, with the remainder of Q1 75% filled compared to an 84% 10-year average at the end of January.”

Speaking about the impact of the coronavirus, Vieth said, “On balance and with appropriate caveats, we believe it is early enough in the year that any temporary near-term impacts on economic activity should largely be worked out in the back half of the year, leaving full-year expectations largely unchanged.”

Regarding the medium-duty markets, he commented, “Similar to Class 8, to find a higher Classes 5-7 inventory-to-retail sales ratio, we have to travel back to November of 2010, the point just before GM wrote off their entire MD inventory after ceasing production in mid-2009. In January, falling sales, at a three-year low, and rising inventory boosted the seasonally adjusted IN/RS ratio to 3.8 months.”

ACT’s State of the Industry: NA Classes 5-8 report provides a monthly look at the current production, sales and general state of the on-road heavy and medium duty commercial vehicle markets in North America. It differentiates market indicators by Class 5, Classes 6-7 chassis and Class 8 trucks and tractors, detailing measures such as backlog, build, inventory, new orders, cancellations, net orders and retail sales.

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