Class 8 Order Season Continues Below Year-Ago Surge

An executive with Volvo Trucks North America sees the drop as a reset for the market. (Volvo)

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North American Class 8 truck orders for October fell precipitously from their year-ago surge, taking a steep but unsurprising drop, according to ACT Research.

ACT preliminary data showed orders fell 24.9% to 31,900 units from 42,500 during the year-ago period, but order boards at this time last year reflected exceptionally high demand following two years of supply chain disruptions.

Despite the drop, ACT noted that orders for the month remained above trend levels both nominally and seasonally.

“A strong seasonal factor presses down on ‘real’ orders this month, with seasonal adjustment dropping October’s intake to 25,800 units — still good for the third-best order month in the past 12 months,” said Kenny Vieth, president and senior analyst at ACT. “The Class 8 backlog should rise by around 3,400 units when full October data are released in mid-November. If those numbers hold, Class 8 backlogs will have ended October at around 165,000 units.”

[October State of the Industry: Classes 5-8 Vehicles Preliminary Update] - Class 8 truck order season continues with 31,900 units in October.

Get the update - https://t.co/KyMWYFJIVJ#truck #semitruck #trucking #transportation, #Class8, #ACT, #ACTResearch pic.twitter.com/3ywhYxl0cq — ACT Research (@actresearch) November 3, 2023

Vieth pointed out that while backlogs have begun rising — common for this time of year — the absence of the large backlogs that defined the past two years point to the importance of more seasonal order activity in the months ahead.

An executive with Volvo Trucks North America sees the drop as a reset for the market.

“The October industry orders as per ACT came in at close to 27,000 units for U.S. and Canada, which is 6,000 less than in September and significantly less than October of last year when we did see over 40,000 orders,” said Magnus Koeck, the truck maker’s vice president of strategy, marketing and brand management. “This is a quite clear indication that market is slowing down, as we have expected for some time.”

Koeck said there remains solid demand among larger fleets, but smaller operators are thinking twice before they place orders. “Overall uncertainties about where the economy will go in 2024 as well as the higher interest rates are, of course, contributing factors to that,” he said. “However, we still believe the total Class 8 market in U.S. and Canada next year will be strong: around 270,000 trucks.”

Kenworth Sales Co. President Kyle Treadway said orders activity over the last couple of years was less a measure of demand and more a measure of availability and allocation as supply chain disruptions and parts shortages prevented truck manufacturers from producing enough units to meet demand. Now, he said, lingering economic uncertainty clouds the market.

“There’s a lot of question marks because it’s not clear what’s going on with all of the economics and the dynamics of the marketplace,” Treadway said. “We saw a pretty good uptick in orders in October month-over-month, but we didn’t sell out.”

He also isn’t placing a lot of importance on year-over-year swings.

“It’s not a fair comparison,” Treadway said. “[We are] returning to a more traditional marketplace where order intake is more indicative of customer demand, and we are seeing it normalized. We didn’t sell everything out within one week when the order boards were opened up; it’s more of a measured approach based upon freight volumes, freight rates, driver availability and freight contracts.” Treadway noted the October numbers would be considered good if compared to more normalized levels.

“October’s result is a continuation of a relatively strong opening for the model-year 2025 build,” added Chris Visser, director of specialty vehicles at J.D. Power. “Fleets continue to cycle out aged and high-mileage equipment that was kept in service longer than usual during the pandemic. Also, the implosion in spot market rates gets all the attention, but contract rates are still very strong by historical standards. That’s where fleets play, and that’s where confidence in new truck orders is coming from.”

Visser added, “Going into 2024, analysts are still predicting a moderate recovery in freight demand in the second half, which suggests the new truck environment could remain fairly healthy.”

“Year-to-date preliminary sales data indicate an increase of 10% in heavy-duty vehicle sales for U.S. and Canada compared to the same period last year,” said Jonathan Randall, president of Mack Trucks North America. “Demand for Class 8 vehicles was strong in September as customers renewed fleets coinciding with an earlier opening of order books.”