A dearth of Class 8 truck orders in April is more technical than meaningful. Major OEMs express optimism about delivering plenty of new equipment to ease pandemic-related pent-up demand.
Preliminary North America net orders were 11,600 units, down 27% from a year ago and off 39% compared to March, according to ACT Research. FTR Transportation Intelligence pegged preliminary orders at 12,050 units, down 20% year over year and 37% from March.
Class 8 orders have totaled 298,500 for the previous 12 months, FTR said.
“When 2024 order boards open later this year, we anticipate some modest additional strength in order activity,” Eric Starks, FTR chairman, said in a news release. “There still are indications that fleets are requesting equipment, and there has been no notable uptick in cancellations.”
‘Not seeing any drop in demand whatsoever’
Manufacturers express that sentiment in stronger terms.
“Right now we’re not seeing any drop in demand whatsoever. Orders are still strong,” Daimler Truck North America CEO John O’Leary said. “Something like 80% of the big fleets do business with us primarily. And most of them are positioned right now where their average [fleet] age has crept up.”
The pandemic and resulting supply chain disruptions combined to practically dry up new truck availability for more than two years. That led to exorbitant prices for the few used trucks sold in auctions as fleets drove trucks beyond typical turnover cycles.
Even now, as availability of microchips and other components improves, stock units of new trucks are practically non-existent at dealerships.
“I cannot remember the last time we had a truck that did not have a name on it,” Alex Voets, a general manager at Velocity Truck Center in Fontana, California, told FreightWaves.
Opportunistic owner-operators exit market
O’Leary said one segment, albeit a small one, of DTNA’s business has noticeably declined.
“Some of the smaller mom-and-pop owner-operators that always start up during a big boom in the industry when spot rates are high are struggling. And so the order intake from that part of the industry is weak,” O’Leary said
Eric Crawford, ACT Research senior analyst, pointed to recent turmoil in the banking sector as worsening April’s orders for some fleets because of tightening credit.
“While we expect orders to remain at subdued levels into mid-Q3, we are not inclined to think April’s order activity represents the likely run rate going forward.”
Added Starks: “With build strong over the last several months, backlogs will have come down during April. The incoming order rate for March was 145,000 annualized, which is on par with the weak order levels during the summer of 2022. Despite the weakness, we do not anticipate much, if any, negative impact on production levels over the next few quarters.”
Neither do manufacturers. Several have raised their estimate for deliveries this year, the lower end of the funnel that starts with orders.
Germany’s Traton Group, which includes Navistar Inc., said the ratio of incoming orders to unit sales was 0.81 in the first three months of the year. That meant sales exceeded new bookings, “causing a moderate decrease in order backlog.”
Paccar Inc. raised its full-year U.S. and Canada industry sales estimate to 280,000 to 320,000 trucks.
“This continues to be a favorable operating environment,” Paccar CEO Preston Feight said.
Related articles:
March Class 8 truck orders reset to normalized demand
Why Class 8 truck orders are outperforming a shaky economy