ACT Research: With 2023 Overbooked, Class 8 Orders Will Now Set the Tone for 2024
On continued strong build rates and seasonally weak order volumes, July’s NA Class 8 backlog fell by 11,632 units to 163,576 units. At 5.9 months, the nominal backlog-to-build ratio remains comfortably healthy into year end, according to ACT Research’s latest State of the Industry: NA Classes 5–8 report.
According to Kenny Vieth, ACT’s President and Senior Analyst, “With over 90% of the current backlog scheduled for build in 2023, Class 8 backlog is likely to continue to decline until 2024 orderboards are opened.” On medium duty, he continued, “The Classes 5–7 backlog slipped 1% to 116,890 units in July. The BL/BU ratio fell to a still elevated 4.6 months on the smaller backlog and higher daily build rate.”
Regarding July’s Class 8 build rate, he noted, “Build slightly exceeded OEM build plans, but remainder of the year guidance was trimmed slightly. Notably, Class 8 build and retail sales were virtually identical last month, keeping inventories at relatively lean levels. Tight inventories are a reminder that pent-up demand continues to be worked off in 2024.”
Class 8 orders rose 41% y/y to 15,573 units. On a seasonally adjusted basis, orders were flat sequentially at 20,100 units. Classes 5–7 orders rose 22% y/y against 2022’s easiest order comp to 16,736 units.
Vieth concluded. “July is the worst month of the year for both Classes 5–7 and Class 8 orders. While vacations are a likely factor, the bigger ones are systemic. As is often the case, the current year backlog is full. At the same time, the OEMs have typically not yet opened orderboards for next year. Hard to book an order in those circumstances. With the current backlog front-end loaded, orders will receive heightened attention as 2024 orderboards are opened in the next few months.”
ACT’s State of the Industry: NA Classes 5–8 report provides a monthly look at the current production, sales, and general state of the on-road heavy and medium duty commercial vehicle markets in North America. It differentiates market indicators by Class 5, Classes 6–7 chassis and Class 8 trucks and tractors, detailing measures such as backlog, build, inventory, new orders, cancellations, net orders, and retail sales. Additionally, Class 5 and Classes 6–7 are segmented by trucks, buses, RVs, and step van configurations, while Class 8 is segmented by trucks and tractors with and without sleeper cabs. This report includes a six-month industry build plan, backlog timing analysis, historical data from 1996 to the present in spreadsheet format, and a ready-to-use graph package. A first look at preliminary net orders is also published in conjunction with this report.
ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.