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Lower-than-expected orders for Class 8 trucks in December slightly impacted the seasonally adjusted five-and-a-half months needed to build and deliver a new unit. Strong orders for advertising trucks, demand in Mexico and exports mitigated weak tractor stockpiles. .
Preliminary North America net orders of 26,500 in December came in 15,000 below November. Adjusted for seasonal factors, the intake was closer to 20,900, ACT Research reported.
Orders for the full year 2023 fell to 278,500 units, down 7% from 2022, according to ACT. Truck brands produced about 337,000 Class 8 trucks last year, far more than orders handled. But the backlog of about 180,000 units has disappeared. The industry is in good shape heading into 2024, Kenny Vieth, president and senior analyst at ACT, told FreightWaves.
FTR Transportation Intelligence estimates full-year orders at 253,000 with an annualized rate over the past six months of 302,000 units. The last quarter of the year at an annualized rate of 362,000 units.
FTR pegged December initial orders at 26,620, down 26% from November and down 6% from December 2022.
“Despite the slight year-over-year drop in orders in December, the market is still showing a traditionally strong performance,” Eric Starks, president of FTR, said in a press release. “Although freight markets have been weak for an extended period of time, fleets are still ordering equipment. “
Pent-up demand from 2021 that followed the pandemic was largely sated in 2023, according to ACT. About 12,000 new trucks were exported in 2023. Thousands more used Class 8 tractors also found their way to Central America, the Persian Gulf and some parts of Africa, Vieth said.
“Unfortunately, the tractor market is overcapitalized, so a recession in 2024 must be avoided,” ACT’s Vieth said. “The lows are declining due to continued strength in the professional, Mexican and export markets. “Mexico’s economic recovery saw the country overtake China. as the U. S. ‘s largest trading partner in July.
“As the Mexican economy has revived, demand has been constrained because U.S. and Canadian truckers were in line first,” Vieth said. “You had a very weak pre-pandemic Mexican new truck market. As a result, the fleet age is as old as it’s been in 20 years.
“We’ve been talking about reshoring for a decade, but between the supply chain disruptions and COVID, in recent years, there still haven’t been good words.
Strong orders for advertising trucks for advertising structures and oil production are expected to continue in 2024.
“A lot of buildings are being built in the wake of infrastructure laws and CHIPS,” Vieth said.
Fleets and dealers ramped up orders in California last year ahead of the delay in the Advanced Clean Fleets rule that was intended to begin setting quotas for zero-emission truck purchases this month.
“There was a breakthrough in 2023 thanks to California, so it becomes a drag in 2024,” Vieth said. “When you look at the EPA regulations (nitrogen oxide emissions regulations) in 2027, the question arises: when does this [breakthrough] begin??
“OEMs will say they’ll do everything they can to get their consumers to start spending cash in 2024 because they need to make that year as shallow as possible. But the smooth functioning of those ancillary markets contributes to a comfortable landing. We call it the most productive recession in history.
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