US truck makers face more woes

The extent of the woe experienced by North American Class 5 to 8 is reflected in the latest figures which show a near 60 per cent drop on year-by-year basis.

Class 8 net orders in July fell 20 per cent month-over-month, but contracted nearly 58 per cent on a year-over-year basis, to a total of 10,358 units.

Medium duty net orders totaled 15,364 units, rising 1 per cent month-on-month and year-on-year. These results were published in the latest State of the Industry report, recently released by ACT Research Co. (ACT). The report covers Classes 5 through to Class 8 vehicles for the North American market.

As if he did not have enough troubles on his plate rationalising Navistar International Corporation into a leaner, fitter business, chief executive officer Troy Clarke also has to contend with market fluctuations. Charged with turning the company round, Clarke has found the swings and roundabouts of the North American truck market a burden he could well live without.

“Outside of the bright spot that continues to be demand for vehicles in Mexico, July’s batch of Class 8 market indicators provided no sign of near-term relief. The US and Canadian tractor (especially sleeper) markets remain over-capacitized,” said Kenny Vieth, president and senior analyst at ACT.

“Historically, July is the worst order month of the year. To improve interpretation, ACT seasonally adjusts its data. July’s 10,400 Class 8 net orders (124,000 SAAR) seasonally adjusts to 12,000 units (142,000 SAAR). Actual or adjusted, we have to go back to Q1 2010 to find comparably weak volumes,” Vieth added.

Vieth said that steady-as-she-goes sentiment remains in place for medium-duty vehicle markets.

He explained, “After an eight-month run in which Classes 5-7 orders averaged 21,300 units a month, driven in part by new product introductions, orders have cooled. In July, total Classes 5-7 net orders rose 1 per cent month-on-month and year-on-year to 15,364 units, with seasonal adjustment boosting the total to 18.200 units.”

Meanwhile, on 7 June, Navistar’s Troy Clarke was able to announce a second quarter 2016 net income of $4 million, compared to a second quarter 2015 net loss of $64 million.

Revenues in the quarter were $2.2 billion, down 18 per cent compared to $2.7 billion in the second quarter last year. The decline reflected lower volumes in the company's core US and Canadian markets, due to softer industry conditions and the discontinuation of the company's Blue Diamond Truck (BDT) joint venture in mid-2015.

Navistar also experienced lower engine volumes in Brazil, due to ongoing weak economic conditions in that country. This was partially offset by higher sales in the company's parts segment.

On a brighter note, Clarke would be able to find some solace in some other financial figures. Navistar ended the second quarter with $817 million in consolidated cash, cash equivalents and marketable securities and $732 million in manufacturing cash, cash equivalents and marketable securities. There’s nothing quite like cash for bolstering the mind.