North American Class 8 truck orders fell sharply in July, according to preliminary data from ACT Research, but it’s not clear what was driving the decline.
Class 8 orders totaled 11,400 units with Classes 5-7 orders came in at 13,500 units.
“Do we think July’s weak orders represent the end of healthy demand? Perhaps,” said Eric Crawford, ACT’s vice-president and senior analyst. “Recent spot rate weakness, and our expectation that a freight recession is inbound, would suggest yes.”
However, Crawford also noted other factors could be in play: Class 8 backlogs stretch into 2023; supply chain issues remain; and inflationary cost pressures leave OEMs in no rush to open 2023 order boards.
“In light of this confluence of factors, plus typically challenged seasonality in Q3, we hesitate to extrapolate too much from a datapoint that could prove to be an outlier. To be sure, though, it is a datapoint that warrants increased vigilance going forward,” Crawford said.
About medium-duty orders, he said, “July demand for medium-duty vehicles was similarly challenged, representing the lowest seasonally adjusted total since the pandemic – likely, at least in part, evidence of the shift in consumer spending from goods to services.”
FTR, meanwhile, reported preliminary North American Class 8 net orders for July fell to their lowest level since November 2021 at 10,600 units. Order activity was the weakest for the month of July since 2019, down 33% from June and down 60% year over year.
Don Ake, vice president of commercial vehicles for FTR, said: “Orders, though paltry, met expectations since OEMs have filled almost all available build slots this year. July is typically the weakest order month of the year, so it is no surprise orders dipped to around 10,000 units. Fleets continue to shop around, looking for available trucks, but they are becoming increasingly difficult to find. The supply chain is improving very slowly, but not nearly enough to meet demand.
“It’s like when popular concert seats are sold out, you get no sales the next day. Class 8 trucks are popular and in scarce supply in 2022. The OEMs just don’t have the capacity to meet the high demand this year. OEMs could increase production by about 10% over the current rate if they could get the parts, but the supply chain remains clogged.
“Despite the economic uncertainty, demand for new trucks is expected to remain robust in 2023. Freight is still forecast to grow at a steady clip. When booking commences for 2023, possibly as early as September, Class 8 orders could reach record heights.”