North American Class 8 production reached a 19-month high in June after stronger orders earlier this year, according to ACT Research Co.
“[May] was a 15-month high; the more accurate point being [June is] another cyclical high,” ACT Vice President Steve Tam told Transport Topics.
“Annualized, June’s per-day production rate equals a full-year production of almost 270,000,” Tam said in a statement.
Also, with orders moderating into the soft season and build rates ramping up, Class 8 backlogs are in decline, he said.
“With seasonal orders slowing likely into September and for continued strong build rates, we expect backlog paring to continue the next few months,” Tam said. “As has been the case for some time, the backlog continues to be front end-loaded.”
However, orders have pulled back — falling below 20,000 in May and June for the first time this year — R.W. Baird analyst David Leiker wrote in a report to investors, and production may be challenged in the second half of the year.
“Class 8 order rates have pulled back the last two months and are now well below current levels of production (230,000 seasonally adjusted annual rate orders vs. 270,000 SAAR production), leading to an erosion in backlog and modest building of inventory,” according to Leiker.
He noted the truck makers’ fourth-quarter build plan still is 61% unfilled, meaning they need more orders. The normal is 54% at this point, he wrote. “Our belief is that orders remain below year-to-date levels through summer. We believe there are risks to current production expectations for the second half, which are not being widely discussed today.”
Turning to the North American medium-duty market, build outpaced retail sales in June.
“Positively, stronger sales kept the inventory and retail sales ratio in check,” Tam said. “On a per-day basis, sales jumped over the 1,000 unit threshold for just the second time in the past 18 months in June.”