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North American Class 8 net orders reached 15,000 units in June, according to preliminary data released Wednesday by FTR, up 13% from May and down 36% year-over-year.
Class 8 orders have totaled 260,000 units over the last 12 months. OEMs are running out of build slots this year and orders continue to be subdued as 2023 build slots remain restricted due to limited visibility into future conditions surrounding material costs and lead times.
Truck makers are working to increase build rates but semiconductors, tires and other key components remain in short supply and continue to limit production.
Charles Roth, analyst-commercial vehicles for FTR, noted the June number is positive in the sense that all OEMs entered orders, indicating some optimism about improved future supply chain performance but it understates “the tremendous demand for new trucks.”
“The OEMs have a large number of fleet commitments for 2023,” he said. “They are delaying entering these orders until they know how many they will be able to build each month. Supply chain delays continue to constrain build rates. “As a result of replacement demand, fleets still need a considerable number of new trucks right now. Industry capacity remains extremely tight, resulting in elevated freight rates. The carriers have freight to haul and funds available for new trucks, but OEMs remain limited due to parts shortages. Also, large fleets are now running vehicles beyond their trade-in cycles and need to trade in older trucks, which will result in increased replacement demand in 2023.”
ACT’s Vice President and Senior Analyst Eric Crawford added that despite broader macro uncertainty about Russia/Ukraine, China, interest rates and a potential recession, the prevailing theme in Class 8 remains exceedingly durable: long backlogs and supply chain-constrained production continue to keep new orders trending within a narrow range.
“Considering Class 8 backlogs stretch into 2023, that there is still no clear visibility on the easing of all things shortage, and the increasing market jitters about an impending recession, June’s net orders were quite solid.”