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Is it a good time to order a new HDT?


skp51443

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I ran across this on truck sales and it might be a good time to look at getting a new truck:

 

http://www.zerohedge.com/news/2015-12-03/there-go-truckers-trade-collapse-hits-home-unprecedented-59-plunge-heavy-truck-order

 

 

 

November Class 5-8 orders decreased 40% yr/yr and 26% from October. The yr/yr decline was the eighth consecutive month of Class 5-8 contraction. The decline yr/yr was driven by weaker Class 8 order intake. Class 8 orders of 16,600 were below our channel check based 22,000-25,000 expectation, dropped 59% yr/yr and 36% from October (vs. the ten-year average 7% decrease in November from October), and was the weakest order month on a seasonally adjusted basis since August 2010. Clearly, November Class 8 orders slowed to weak levels and were beneath expectations. We estimate the Class 8 order intake translates into a Class 8 backlog decline of about 6-8% from October and 15-18% yr/yr. Further, we estimate that backlog to inventory fell to 1.6-1.7 from October’s 1.82 and remained beneath 2 for the third consecutive month.

 

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New truck carries a 12% FET

Mark, only if over 33K lbs gross, is that true? That's easy to avoid on a single rear axle new truck.

 

Stanley, I believe that trend reversed itself this month. Pent up demand I suppose.

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Straight truck, 33,000 lbs.

 

tractors with a GVWR over 19,500 lbs.and have a gross combined weight, in combination with a trailer or semitrailer, of 33,000 lbs.

 

A lot of Sportchassis dealers were put out of business because they ignore the tractor rule.

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New truck and trailer sales and the backlogs are dropping like a rock. All of the freight indexes, both truck and rail are also down. As leading indicators, they do not paint a pretty picture. I, and numerous friends of mine are on the front lines of this "contraction"

In the old days, both truck and auto manufacturers would have kept tge lines moving with heavy discounting. That is no longer the business model. They just idle the plants. Great Dane and Utility plants I have been to in the last couple of months have maybe 5 days worth of completed production(250 + -)on hand instead of the usual 21 day (750+) supply. No one is placing significant orders.

If you would like to get a feeling for what is happening and why I would suggest going to see " The Big Short", playing at a theatre near you.

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Jeff,

 

Do you think it's all Wall Street? Or could it be the "new" emissions standard coming down the line that has lead to the drop in sales? Personal cars and Light duty trucks are doing "very" well I must say.

Are companies holding out for the next generation of "connected" trucks that will offer a lot more convenience features and better MPG thru newer forms of technology?

 

Your thoughts.....

 

Curt

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That wasn't the point of the OP. There's some troubling indicators out there.

 

For the extra points..... anyone follow the BDI (Baltic Dry Index) and care to comment?

 

It continues to fall...not a good indicator of future economic growth.

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I was a proud stockholder of Ford stock since the meltdown of 2008. Mostly based on the reputation of Alan Mulally. He did not disappoint. Got out about a month ago. About a week ago the headline in the WSJ was touting record sales across the board, 17.5 million units, a record. Word is the financial people are selling all of those vehicles to lots of folks with unqualified credit, just like they did with housing. Look for lots of repo's to compete with new sales, combined with recent off lease vehicles.

That was the signal for investors to sell. This cycle has run its course.

Same with heavy trucks. The underlying economy is really quite weak. Worldwide. Commodities are another indicator.

Jeff Beyer temporarily retired from Trailer Transit
2000 Freightliner Argosy Cabover
2008 Work and Play 34FK
Homebase NW Indiana, no longer full time

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Jeff,

 

From what I gather from your post, we should see a glut in the markets in a year or so? There should be plenty of used trucks (and other motorized equipment for the picking then?

 

Curt

 

Curt

2001 Freightliner Century, 500hp Series 60, Gen 2 autoshift, 3.42 singled rear locker.

2004 Keystone Sprinter 299RLS (TT)

2 & 4 Wheelers!

2013 Polaris Ranger 800 midsize LE

Our motto "4 wheels move the body, 2 wheels move the soul!"

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That was one of the cautions in the WSJ article. The used vehicle market is glutted now and there are bargains all over the place. The used vehicle market is probably the closest thing this country has to a pure market supply / demand curve. Not so with new vehicles, where the manufacturer still has significant pricing power.

 

One of the best stories about the pricing of new cars was in Lee Iacocca's first biography. He described taking over at Chrysler in 1978 and discovering they were just letting the assembly lines run without firm orders from dealers, parking the cars all over the state of Michigan(the state fair grounds was filled to capacity). Then the district sales reps would call the dealers and beg them to take cars. The dealers would hang up on them and wait for better and better prices as the situation got more desperate.

Up until recently, all the auto manufacturers and to a lesser extent truck manufacturers sold excess units for little profit to rental and leasing outlets. It became a drug of sorts. Almost everyone has put an end to the practice.

So to get back to the OP, deals on existing iron can be had, but ordering one won't yield much of a discount.

Jeff Beyer temporarily retired from Trailer Transit
2000 Freightliner Argosy Cabover
2008 Work and Play 34FK
Homebase NW Indiana, no longer full time

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I was just reading an article in a farm publication about the deals on lightly used, high powered, farm tractors. The author was advocating buying 2-3 y/o tractors for around $250k and making a profit after using them for three years. It sounds like much the same is going on in the trucking biz.

 

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What you are seeing is the end of another trade cycle and the end of the huge multi year orders being done. It was insane until September when it just plain shut off. All the fun of 2014 and early 2015 was supposed to cover the cycle and then go back to "normal" but, oops, freight dropped off too and all of a sudden the cycle and current capacity was covered and everything but medium duty dried up. I know I realized it was for real in October and sold a bunch of stuff and reaffirmed my vows with my Boeing wife. ;) I think I worked less than half of December. Medium duty is strong because it is tied in with retail distribution (Christmas?) but I agree that its time will soon come, and you'll see all the troubles go mainstream as mentioned above.

 

I personally don't think 2016 emissions will make any difference. You will see some love given to flatbedders and tankers as part of that, which will result in new charge and start items and some new body & fairing configs that will make Jack grin a bit. 2018 won't really cause a wait & buy in sleeper tractor/van trailer either, but it may in bulk haul and/or weight & space sensitive applications. But what does come out in 2017 will get Jack off his rear and down to MHC. What GHG is causing for 2020 Jack is going to abandon the wife, sell the dog, ditch the 2017, and camp out in his salesman's driveway with a big ol pile of cash ready to order. It is some pretty cool body stuff I can't even believe they are considering for real.

 

Used trucks you can finally start to afford again. They were part of what was causing the new orders in the past year. I have no idea where they are going in the next couple years though. I'm sure you'll see a big bump in gliders if they do decide to go through with killing them for 2018. But really, after two more years of that how many more old 90's FLD's will they be able to find out there to tear up in earnest? I dunno, guess we'll have to wait and see on those as well.

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What you are seeing is the end of another trade cycle and the end of the huge multi year orders being done. It was insane until September when it just plain shut off. All the fun of 2014 and early 2015 was supposed to cover the cycle and then go back to "normal" but, oops, freight dropped off too and all of a sudden the cycle and current capacity was covered and everything but medium duty dried up. I know I realized it was for real in October and sold a bunch of stuff and reaffirmed my vows with my Boeing wife. ;) I think I worked less than half of December. Medium duty is strong because it is tied in with retail distribution (Christmas?) but I agree that its time will soon come, and you'll see all the troubles go mainstream as mentioned above.

 

I personally don't think 2016 emissions will make any difference. You will see some love given to flatbedders and tankers as part of that, which will result in new charge and start items and some new body & fairing configs that will make Jack grin a bit. 2018 won't really cause a wait & buy in sleeper tractor/van trailer either, but it may in bulk haul and/or weight & space sensitive applications. But what does come out in 2017 will get Jack off his rear and down to MHC. What GHG is causing for 2020 Jack is going to abandon the wife, sell the dog, ditch the 2017, and camp out in his salesman's driveway with a big ol pile of cash ready to order. It is some pretty cool body stuff I can't even believe they are considering for real.

 

Used trucks you can finally start to afford again. They were part of what was causing the new orders in the past year. I have no idea where they are going in the next couple years though. I'm sure you'll see a big bump in gliders if they do decide to go through with killing them for 2018. But really, after two more years of that how many more old 90's FLD's will they be able to find out there to tear up in earnest? I dunno, guess we'll have to wait and see on those as well.

 

So Scrap..........After 2017 how much younger will Jack get each year that he buys the next-wonder-truck ? ?

 

At my age.........maybe you might want to order me a mid-size fleet.....just enough trucks to rewind the clock so that I could correct a few hiccups I had in my 30's.....

 

Back when "Grumps" had his KW & Autocar fetishes he seemed to age more as he "collected" more and more trucks......

 

All kidding aside seems like every "generation" of trucks makes the trucks less........ truck harsh....

 

Progress is interesting and it's fun to look where we have been and wonder where we are going.....

 

Drive on..............;.(On to the trucking fountain of youth......)

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French-Ellison already has Jack's new truck waiting for him, Scrap. There's a nice shiny mid-roof 680 sitting right out front, awaiting his arrival in the Valley.

Phil

 

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You need a lot of money to keep new emission trucks running, just ask anyone who owns a 2010 or newer. Sure, it is under warranty...... your going to be sitting along the road waiting for the tow truck. A new Volvo is $150,000. and..... you get to dump DEF in it every time you fill up.

 

2000 and older trucks are exempt from the new log book rulings that state a 2000 and newer will be required to have computerized logs. Any of you not ever been in trucking have no idea the impact this will have on delivery's. A lot of customers are coming in from everywhere but California and buying up the old stuff.

 

2007 and newer are required to be carb compliant after January 1 this year.in California, if you are commercial. Nothing yet on private trucks and coaches.

 

Older trucks are holding prices, depending on your location. As freight slows up, large fleets will downsize by the thousands. Go on line to Taylor and Martins website, or Ritchie Brothers and watch the auctions.

 

FYI.... Phoenix Ritchie Bros auction has a singled out, with large sleeper trailer toter coming up. It is gold in color.... just saw it today driving by. Bill

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Fitzgerald's was pretty cool last year when we visited during the ECR, but you can only get a manual, no ultra-shift or auto-shift.

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Check out http://www.hhrvresource.com/

for much more info on HDT's.

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