Heavy truck orders slid slightly in October as OEMs continue to struggle with getting production inline with demand. The 24,500 units booked last month, according to preliminary data released by FTR, was down 12% from September and down 39% from October last year.
Class 8 orders have been between 23,000-28,000 units for five of the last six months and now total 437,000 units for the previous 12 months.
“It is interesting that the order rate has been basically tracking the production rate since May, with a couple of exceptions," said FTR Vice President of Commercial Vehicles Don Ake. "It indicates that the market is essentially frozen in this range of around 22,000-26,000 trucks. Without the clogged supply chain, production would be significantly higher and orders would be elevated also.”
Production rates for the first quarter next year remain uncertain due to ongoing supply chain difficulties and worker availability and Ake said OEMs continue to be careful not to overbook fleet orders for the first half of 2022.
"The OEMs are having tremendous difficulty planning production for Q1. Unfinished orders are rolling over from 2021 and there are fleets placing new orders for 2022 delivery," Ake said. "All these fleets are desperate for new trucks and the challenge for the OEMs is to book the maximum production possible without excessive overbooking."
Some OEMs are canceling 2021 orders and rebooking those orders in 2022 to manage the backlog – sometimes at higher prices, as commodity and other costs remain elevated. Others are only booking a limited number of orders every month, Ake said.
With backlogs stretching into the second half of 2022 and still no clear visibility on the easing of the everything shortage, ACT Research President and Senior Analyst Kenny Vieth said modest October order results suggest OEMs are taking "a more cautious approach, so as not to extend the cycle of customer expectations management.
"Importantly, we reiterate, with critical economic and industry demand drivers at, or near, record levels, industry strength is exhibited in long backlog lead-times, rather than soft orders in October," Vieth added. "In addition to ongoing strength in key freight-generating economic sectors and pent-up goods demand growing across a broad front, ACT’s preliminary read of the publicly traded TL carriers Q3 financial results shows net profits approaching best-ever levels.”
