May Class 8 Orders Show Year-Over-Year Rebound

Orders Rose 10% to 15,500 Units
Mack production
Mack trucks in production at the Lehigh Valley Operations in Macungie, Pa. (Mack Trucks)

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North American Class 8 orders in May reversed the trend of year-over-year declines by increasing to 15,500 units, ACT Research reported.

ACT preliminary data showed orders increased 10% compared with 2022, when they hit 14,000 units. The only other month so far to see a year-over-year increase was February. Orders also jumped 34% from the previous month at 11,600 units.

“Given robust Class 8 orders into year-end and the ensuing backlog support, coupled with normal seasonal order patterns, orders were expected to moderate into Q2 and remain at relatively soft levels into mid-Q3 ’23,” said Eric Crawford, vice president and senior analyst at ACT. “May orders were in line with this view.”

Crawford added that the relatively few build slots still free in the second half of the year suggest order intake is unlikely to find meaningful traction in the coming months. The ACT report also noted preliminary Classes 5-7 orders surged 27% year-over-year to 19,000 units.

“Medium-duty demand surged 27% higher y/y to 19,000 units (+3% m/m), reversing course after three straight months of y/y declines,” Crawford said in the report. “The seasonally adjusted May intake, at 20,600 units, increased 28% y/y (+11% m/m).”

FTR, an economic and freight forecasting firm, didn’t see as significant an increase with its preliminary data showing that Class 8 truck orders increased 2% year-over-year to 13,600 units from 13,300. It also recorded a 13% month-over-month increase with 12,050 units being ordered for April.

“With essentially all the build slots accounted for in 2023 and 2024 slots not yet open, a low level of activity in orders was no surprise,” FTR Chairman Eric Starks said. “In fact, there was an expectation that the number could move below 10,000 units. Sub-10,000-unit order months are still possible over the summer. No surge in order activity would be expected until the OEMs open build slots for 2024, which would likely be August at the earliest.”

FTR noted in its report that while the number was above expectations, the level of order activity continues to be below replacement demand levels. The report added total Class 8 orders for the past 12 months have equaled 298,700 units.

“Fleet demand for equipment does not appear to be waning as they still want to take delivery of new equipment,” Starks said. “Strong backlogs are keeping build demand strong, and FTR doesn’t anticipate any negative impact on build activity due to the recent order activity.”

Kyle Treadway, president of Kenworth Sales Co., noted that the truck manufacturers have been able to work through many of the supply chain issues they’ve been facing in recent years, but that they are still being hampered somewhat as new issues arise. He likened it to a game of whack-a-mole.

“In general, the OEMs have been controlling order intake for the last two-and-a-half years, and we’re now starting to see it migrate back to the demand side with customers having options, more options than dictate the pace of orders,” Treadway said. “We are still on allocation, but we don’t have as long of a line of customers waiting to place orders.”

Chris Clulow, vice president of investor relations at Cummins, addressed Class 8 truck orders June 7 during the Deutsche Bank 14th Annual Global Industrials & Materials Summit Conference.

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“We saw the April truck orders were a little over 11,000, May was 15,500, and it’s not unexpected,” Clulow said. “The 2024 order boards are still closed by the OEMs for the most part and 2023 is pretty full. So, as we are looking at our guidance, we had assumed moderation toward the fourth quarter.”

Clulow added the slowdown in builds in the second half of the year is seeming less likely as the expected moderation continues to be pushed out. He noted the second half of the year is looking to be as equal on the truck market and he doesn’t see any slowdown in builds based on conversations he has had with manufacturers.

The truck makers contacted by Transport Topics did not respond in time for publication.