Tax Breaks Fueled Record Year For Heavy Truck Orders But Will 2019 Be A Different Story?

Little Rock, Arkansas – 2018 finished as record year for heavy-duty truck orders with more than 490,000.

Truck makers saw a surge in orders at the beginning of 2018, according to ACT Research, and that carried 2018 to a record year for the trucking industry. 2018 orders broke the previous record set in 2004 by almost 100,000 orders.

“For all of 2018, Class 8 orders totaled 490,100 units, far outstripping the previous annual order tally set in 2004 at 390,000 units, with orders averaging 40,800 units/month last year,” said Kenny Vieth, ACT’s President and Senior Analyst.

Preliminary data for December shows a drop off in orders, but “in-line with expectations” according to ACT’s Veith. The industry booked 21,300 units in December, down 24% sequentially from November and 43% from year-ago December.

Keith said of the December slowdown, “Seasonal adjustment is always unkind to Class 8 orders in December, dropping the month’s volume to a 25-month low of 17,300 units.”

 

Tax Breaks Fuel Record Year But What About 2019?

At the heart of the record year for heavy-truck orders was the tax breaks passed by Congress and signed into law by President Trump. Many trucking executives chose to use the tax relief to invest in new equipment and refresh their fleets with better technology.
2019 is also projected to be a strong year for heavy truck orders. Manufacturers are building about 1,400 trucks per day, which equates to 30,000 per month.
Orders are projected to slow to about 20,000 trucks per quarter in the first half of the year, allowing the industry to catch up on the 10-month order backlog, ACT projects.
Still, economist’s are projecting a 2-3% freight growth rate this year which is down from the 5% growth rate experienced in 2018. However, that should by strong enough to keep orders steady most experts believe.
As long as freight continues to outpace capacity, as is expected, it is reasonable to expect truck orders to remain strong throughout 2019.
Image courtesy of Kenworth Motor Co.

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