While last month saw growth in the heavy duty truck sales in Australia, the US market continued on a downward trajectory, plunging 46 per cent year on year in October.
The US market has been in decline for several months now, creating a nervous outlook for 2017 for manufacturers with just 13,900 new trucks registered in October.
According to ACT president Kenny Vieth, many fleets are not updating or expanding fleets as they have in previous years due to falling freight volumes.
“October orders reflect lingering overcapacity from too many Class 8 tractors being purchased relative to freight creation in 2015 and into early 2016,” Veith said.
Both engine and transmission manufacturers are also lowering production forecasts, with Eaton expecting to make 225,000 transmissions and Cummins lowering its output by 31 per cent to just 200,000 units.
“We’re hearing from lots of fleets are delaying purchases because they don’t have quite the miles needed to make a trade in. And the engines are really good out there, so you can stretch a little more out of it,” Cummins CEO Tom Linebarger said.
Industry research firm FTR said the freight market is stabilising and should pick up in the months following the presidential election, but truck sales are unlikely to pick up in the short term.
“Once that uncertainty has been lifted, it should help the equipment markets and the general economy. Orders will likely hover around the 20,000-unit mark in November and December.” said Don Ake, vice president of commercial vehicles at FTR.
Although manufacturers are optimistic of bucking the trend, JP Morgan analysts warn that production may need to be cut further if sales continue as they have recently.