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Third-party axle, engine supply issues dent DTNA truck output
Q3 supply constraints likely to continue through Q4, Radstrom says
A lower-than-expected volume of trucks was assembled in Q3 because of the supply chain issues, which also hurt plants’ efficiency levels. (Daimler Truck North America)
Key Takeaways:
- Daimler Truck said axle and engine supply chain constraints hindered DTNA production in the third quarter and continued into the fourth quarter.
- DTNA sales rose 51% to 45,629 vehicles, but parts shortages increased expedited freight costs and hurt plant efficiency.
- Daimler Truck expects a difficult fourth-quarter production catch-up but remains confident about 2027 demand as North American freight rates improve.
Axle and engine supply chain issues hindered production at Daimler Truck North America’s assembly plants in the third quarter of 2026, and the final quarter of the year has seen little change, the top executive at DTNA’s parent company said.
The owner of Freightliner and Western Star asked suppliers to recruit more staff, purchase more raw materials and add shifts in the spring in anticipation of a steep production ramp-up as the North American freight market rebound got underway, according to Daimler Truck CEO Karin Radstrom.
Some suppliers struggled to do so sufficiently, Radstrom told analysts and investors during the company’s Nov. 6 third-quarter earnings call, as the rebound spread from the spot market to contract and dedicated haulage.
As a result, a lower-than-expected volume of trucks was assembled in Q3 because of the supply chain issues, which also hurt plants’ efficiency levels, added Chief Financial Officer Eva Scherer.
DTNA sources engines for Freightliner and Western Star trucks from in-house division Detroit Diesel and Cummins.
A spokesperson for Columbus, Ind.-based engine and component maker Cummins told Transport Topics on Nov. 6: “The pace of the industry’s production ramp-up has created challenges across the supply chain, and we have experienced some component constraints, particularly in axles.
“Our teams are working closely with customers to address these challenges and support demand. We’re encouraged to see the continued strengthening in the North American truck market.”
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DTNA still saw a 51% increase in sales in Q3 to 45,629 trucks and buses from 30,225 vehicles in Q3 2025, but the vehicles can count as sold only if they have been built. DTNA is also the parent company of school bus manufacturer Thomas Built Buses and Freightliner Custom Chassis.
Sales in Q3 totaled 40,084 vehicles in the U.S., an increase of 54% year over year; 3,830 trucks and buses in Canada, up 39% versus Q3 2025; and 1,455 units in Mexico, up 9% year over year.
The company booked orders for 29,357 trucks and buses in the most recent three months, a 12% increase from 26,168 vehicles a year earlier but a 17% decrease compared with the second quarter of the year, Daimler Truck’s Q3 earnings revealed.
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The division’s revenue in Q3 jumped 43% year over year to $6.36 billion from $4.45 billion in the year-ago quarter. Daimler Truck reports earnings in euros, and conversions were correct as of Nov. 6.
However, the impact of that increase was dampened somewhat by the unit’s cost of sales rising 37% to $5.23 billion in Q3 from $3.82 billion in the year-ago period.
Scherer said one reason for the cost of sales increase was higher expedited transportation expenses for parts as the company sought to ship components that were behind schedule to assembly plants as quickly as possible.
DTNA’s expedited costs were in the “low to mid double-digit” millions of dollars range in Q3, Scherer said, adding: “I still expect a high impact from expedited freight in the fourth quarter because we will do everything to get the trucks to our customers.”
Radstrom said DTNA expected it would be difficult to catch up on production before the end of the year, but she was hopeful of doing so by the beginning of 2027.
Radstrom confident about 2027’s prospects
Looking forward, the coming year is expected to be a key year for truck demand and production for DTNA and its peers.
As a result, Freightliner is adding workers at its Saltillo, Mexico, manufacturing plant as production ramps up across North America, Radstrom told TT in September.
A slim majority of Freightliner and Western Star trucks assembled in North America are built at the two Mexican plants.
DTNA also is increasing employment at its Mount Holly, N.C., manufacturing plant, CEO John O’Leary told TT in July.
Daimler Truck is positive about the prospects for demand in 2027, although clarity on noncompliance penalties related to the Environmental Protection Agency’s 2027 nitrogen oxides regulations would help, Radstrom said. Fundamentals remain “very good” due to the continued freight rate rebound.
“The most important [key performance indicator] for us is the freight rates, and that has continued to develop positively,” Daimler Truck’s top executive told analysts. “Therefore … we walk into 2027 quite comfortable that the fundamentals are good. We know there is replacement demand in the market, which should support demand even further during 2027.”
Even before that, Daimler Truck said DTNA is driving its earnings. Daimler Truck reported revenue of $14.01 billion in Q3, a 19% increase compared with $11.76 billion in the year-ago period. The company posted a profit of $782 million in Q3, a 73% jump compared with $453.5 million in the same period 12 months earlier.
