Subdued construction activity and tight lending standards contributed to a decline in Class 8 truck sales last month, but there is reason for optimism.
North American retail sales for new heavy-duty Class 8 trucks totaled 26,500 in August, down 8.9% year over year, according to a Sept. 19 report by ACT Research. Class 8 orders fell 14% YoY to 16,249.
The drop in sales and orders was attributed to slower construction and lower residential spending amid high interest rates.
Used-truck market finds footing
Despite lingering challenges, the trucking industry appears to be on the road to recovery, Kenny Vieth, ACT president and senior analyst, stated in the report.
“While August sales are still red-tag impacted, the decline from July’s unseasonally high sales indicates the industry is on the path to normalization,” Vieth said.
“Red-tag” refers to a separate seasonally adjusted sales figure integrating the typical summer slowdown in trucking.
Meanwhile, retail sales for used Class 8 trucks rose 6% YoY and 2% month over month in August, according to a Sept. 16 report by ACT. That followed unexpected increases of 32% YoY and 38% MoM in July.
Auction sales for used Class 8 trucks rose 21% MoM in August, while wholesale transactions increased 24%.
The recent uptick in used-truck sales bodes well for a market that’s been grappling with excess inventory for the better part of two years, according to Sandhills Global’s monthly indices.
Impact of more homebuying
The Federal Reserve’s decision Sept. 18 to reduce interest rates by 50 basis points could spur an increase in homebuying, which would in turn benefit the trucking industry, Matt Manero, president of Carrollton, Texas-based Commercial Fleet Financing, told Equipment Finance News.
“Lower rates will incentivize a large group of Americans who have put off buying or upgrading homes to finally make the move,” he said. “Homebuying is synonymous with spending money, whether it be to furnish or renovate the space. That type of behavior then spurs all markets of the trucking industry to move products to these homeowners. Trucking gets moving again when Americans can start to spend on things past the bare living necessities.”
However, he warned that rates might still be too high to generate large-scale homebuying or homebuilding.
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