Pent-up demand for new Class 8 trucks in a slowing freight market has rebalanced equipment orders to replacement purchases.
This is not an altogether bad thing as manufacturers look to a slower quarter with more holidays.
“The Class 8 backlog should rise by around 3,400 units when full October data are released in mid-November,” Kenny Vieth, ACT Research president and senior analyst, said. “If those numbers hold, Class 8 backlogs will have ended October at around 165,000 units.”
That’s a healthy number of orders awaiting fulfillment. Some parts shortages in the supply chain continue to vex OEMs. But the whack-a-mole supply chain disruptions of a year ago have largely disappeared.
Class 8 ‘steadiness of supply has been improving’
“The steadiness of supply has been improving. But we certainly had some impacts from that,” Preston Feight, Paccar Inc. CEO, said on the company’s third-quarter earnings call on Oct. 24.
Preliminary net orders were 31,900 units in October compared to 36,900 units in September, the traditional opening of order books for the next year. Adjusted for seasonal factors, the count was 25,800, still the third-best number in the past 12 months, ACT reported.
“The overall picture for truck demand is steady,” said Eric Starks, chairman of FTR Transportation Intelligence. “Despite freight weakness, fleets continue to be willing to order new equipment, affirming our expectations of replacement demand during 2024.”
FTR pegged preliminary October orders at 28,000 units, down 10% from September, reflecting freight transportation weakness. Class 8 orders totaled 255,000 units over the past 12 months.
Class 8 pockets of strength
Less-than-truckload and vocational orders remain pockets of strength against slowing orders for over-the-road tractors, Feight said.
“The first quarter looks pretty good,” he said. “While there may be some moderation in truckload, people are trying to figure out how to think about the next three years.”
Fleets purchasing trucks with current emissions technology, a so-called pre-buy, is expected ahead of stricter regulations on nitrogen oxides (NOx) in 2027. Estimates on how large the pre-buy will be or when it will impact orders vary.
Elevated Class 8 tractor orders in 2022
The catch-up elevated long-haul tractor purchases to 52% of the market in 2022, Jonathan Randall, president of Mack Trucks North America, said Oct. 16 at the American Trucking Associations’ annual Management Conference and Exhibition.
“That market usually hovers in the 50% [range]; it is the engine that powers the train of the North American commercial truck market,” he said. “A couple of years ago, that number was 48%. When we had the real trial, that number was about 42% long-haul registrations. We’re not going to go down to 42% long haul. But you should probably see a little bit of a pullback.”
Without the large backlog cushion of the past two years, seasonal orders take on greater importance, Vieth said.
Mack strike impact unclear
A United Auto Workers strike at Mack Trucks enters its fourth week Monday with contract talks scheduled to resume Tuesday. It is unclear how much production Mack has lost. Sibling Volvo canceled two shifts last Monday because a Hagerstown, Maryland, engine plant that serves both OEMs is involved in the strike.
For Mack, catching up on strike-impacted units might be a greater priority than building on-highway trucks. It mostly services the off-highway vocation and refuse markets.
Related articles:
Class 8 orders hit year’s peak in September
August Class 8 truck orders hit highest level since February
Mack Trucks fires back at striking UAW’s new demands
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