The number of new Class 8 order cancellations fell again in March to continue a positive trend first sighted late last year, Kenny Vieth, president & senior analyst of commercial-vehicle market analysis and forecasting firm ACT Research (ACT), told FleetOwner.

“In a positive sign [for the market], new-truck order cancellations fell to their lowest levels in March since Q3 2010-- and for the second time in the past three months,” Vieth advised out. “Declining cancellation trends in the U.S. and Canada bode well for the future.” What’s more, he pointed out that “reflecting healthy economies and perhaps currency strength, Class 8 orders bound for Mexico and Canada rose to levels last seen in late 2011.”

Overall, according to ACT, Class 8 orders climbed above 20,000 units for a sixth consecutive month in March, but fell from the month before for the first time since November. Class 8 net orders for March added up to just over 22,000 units.

In the Class 5-7 medium-duty segment, net orders for March totaled 15,400 units,  which Vieth said amounted to a volume just below both February and the year-ago March levels. Noting that Class 5-7 orders were flat from February to March, he observed that “stronger school bus and RV orders both month-over-month and year-over-year offset a pullback in step-van orders that came after a significant order for those trucks in February.”

As for the significance of the Class 8 cancellation level, Vieth said it is “akin to a measurement of truckers’ confidence. What’s important to bear in mind is that a cancellation has to happen at least three months ahead of when the order is to be built.

“So, if orders are not being cancelled, the buyers are in effect saying they view the orders they’ve placed as still being in line with what they expect the economy to do in the next three to six months,” he continued. “Put another way, the level of drop-off in cancellations we’re now seeing indicates a growing confidence with the level of backlog orders in the system.”

According to Vieth, while the Class 8 order backlog in October stood at 70,000 units, by the end of March it had risen to nearly 86,000 units. “The current backlog amounts to about a 4.2-month supply, which is at the lower end of comfortable as a ‘stable’ Class 8 market is one in which there’s a backlog of four to five months,” he explained.

Vieth pointed out that back in October and November, the cancellation level was right around 2,300 units. It dropped noticeably in January to 1,200 and by the end of March fell to just 1,000 units.”Cancellations peaked in the second half of last year in the face of the uncertainty around the coming fiscal cliff,” he noted.

Regarding the current state of truck order activity, David Hames, gm-- Marketing & Strategy for Daimler Trucks North America (DTNA), told FleetOwner that “DTNA continues to pace the industry in terms of overall market share, as our March year-over-year retail sales decrease for Class 6-8 from 2012 was 2% vs the overall market decrease of 19%.

“While Q1 2013 sales have been down compared to 2012, the current monthly intake levels exemplify that customers continue to show interest for products that offer industry-leading total cost of ownership, including increases in fuel efficiency, durability and reliability,” he continued..

Hames added that while “economic concerns could still hinder market expansion, DTNA's outlook for 2013 remains in-line with the present commercial vehicle industry market expectations.”

Jack Allen, COO of Navistar International Corp., told FleetOwner that regardless of the order-cancellation level, the market “continues to be choppy and the reason for that is that there is no clear economic forecast that gives our customers the confidence to make a big bold move from a capital investment standpoint.

“Today the freight rates are good, the freight levels are good, but there are a lot of clouds on the horizon from an economic standpoint of understanding where the economy going as well as understanding regulatory issues,” he continued, pointing in particular to the changes to hours-of-service (HOS) regs slated to take effect July 1st. “That [alone] has a number of customers taking a pause to understand what that means before they make a big bold move.”

Allen added that “the plan we built last year is playing out the way we thought. We thought this year was going to be slightly below last year’s level and we expect the second half of this year to be better than the first half of this year.”