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Takeaway: November Class 8 orders weathered the political and literal storms. The data shows the benefit of depressed cyclicals like $PCAR.

Age & Beauty:  Resilient November Class 8 Orders

  • Resilience:  The current US Class 8 truck fleet is the oldest ever, by our data, and November orders show the benefit this provides to the Truck OEMs.  Despite November's headwinds from the fiscal cliff and weather, orders continued sequential YoY improvements.
  • Owners Keeping Pre-2007 Trucks:  The 2004-2006 vintage pre-buy Class 8 trucks have fewer emissions controls than current new trucks.  Owners will be slow to replace these trucks with more complex new units.  Truck OEMs win either through aftermarket parts sales or new truck sales as these trucks age.   
  • Excellent Set-up:  November orders remain 6%-7% below replacement demand despite the sequential improvement, indicating that the Class 8 fleet will continue to age.  An aging fleet represents pent-up demand for new trucks and high margin aftermarket parts.
  • Top Machinery Idea:  With construction activity improving, Navistar continuing with a difficult 13L strategy, and an aging Class fleet, we see PACCAR as a top long idea.  See our Truck OEM Black Book for valuation and other data.

Age & Beauty:  Resilient November Class 8 Orders - 9

Jay Van Sciver, CFA

Managing Director


HEDGEYE RISK MANAGEMENT
120 Wooster St.

New York, NY 10012