Class 8 truck orders were soft as expected in June with manufacturers offering few construct slots until they open order books for 2024 as soon as next month.
But even when OEMs begin taking orders, expect bookings to stay slow as the main target stays on bringing balance to months of orders yet to be produced. Latest orders are running below substitute demand as spot and contract rates proceed to say no.
Depending on the estimate, preliminary orders for Class 8 trucks in June ranged from 13,800 to 16,200. The lower estimate is from FTR Transportation Intelligence. The upper number comes from ACT Research.
“With all of the order slots filled for 2023 and 2024 slots yet to be fully opened, it’s unclear when these ordered trucks will likely be built,” FTR Chairman Eric Starks said. “OEMs have hinted for months that they’re willing to maintain construct activity elevated well into Q4. With the recent solid order totals, it’s all but guaranteed that Q4 production will likely be strong.”
Pent-up demand slowly being met
Additional orders would have little bearing on that. Manufacturers are largely freed from the provision chain disruptions that hampered production for greater than two years. Pent-up demand for brand spanking new equipment is slowly being satiated.
“Given robust Class 8 orders into year-end 2022 and the following backlog support, coupled with normal seasonal order patterns, orders were expected to moderate into Q2 and remain at relatively soft levels into mid-Q3 ’23,” said Eric Crawford, ACT vp and senior analyst.
Under ACT’s estimate, Class 8 orders rose 5% yr over yr and 4% over May. FTR’s more pessimistic guess showed orders flat in comparison with May and down 7% versus a yr ago. FTR pegged total orders for the last 12 months at 297,800 units.
“The normally weaker orders attributable to a seasonal mid-year slowdown coupled with strong construct activity will keep shrinking backlogs,” Starks said. “This may pull backlogs back into a traditional range over the following several months because the backlog-to-build ratio is currently elevated and putting pressure on OEMs to maintain constructing equipment.”
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