As original equipment manufacturers (OEMs) continue to catch up on orders from before, they were able to get more orders for Class 8 trucks in July than expected, but not as many as were needed for replacements.
Orders for new equipment are likely to stay low until the original equipment manufacturers (OEMs) release their order books for 2024. Bookings could still be hurt by signs of a slowdown in the second half of the year.
No one is predicting a big drop in the economy. Because the outbreak has been going on for two years and there are delays in the supply chain, companies still have orders to fill as they try to meet pent-up demand. Because there were so few other cars available, they had to keep theirs running longer than they would have liked.
FTR Transportation Intelligence says that the number of sales in July was about 13,500 units higher than what experts had expected. That was 24% more than in July 2022, but it was 8% less than in June. ACT Research thought that there would be 16,000 preliminary sales in July, which is a 45% increase from the same month last year.
Waiting for the fall
FTR Chairman Erik Starks stated that the net orders did not fall below 10,000 units monthly as expected several months ago, due to fleets waiting for OEMs to open 2024 build slots. It is anticipated that build slots will open soon, so it is likely that orders will not fall much further, if at all, in the near term.
On July 25, the CEO of Paccar Inc., Preston Feight, told investors and analysts on a conference call that the spots for making Kenworth and Peterbilt trucks are full for the year.
The markets are healthy for us globally. Feight said that there are great conversations going on with our customers regarding the trucks and their order needs for next year.
He claimed that the demand for LTL and specialized vehicles is making up for the decline in bookings for long-haul trucks.
Supply chain issues still not fully resolved
He said that we still continue to look at the market as being somewhat constrained in terms of supply. The periodic impact may affect deliveries in Q4 for us and everyone else.
Cummins Inc., which makes diesel engines, says that truck production might go down in the fourth quarter.
CEO and Chair Jennifer Rumsey stated on a conference call with analysts on Thursday that this cycle across markets is expected to be more gentle than what has been typically observed. There is a slight softening in the aftermarket that we are observing.
According to Kenny Vieth, ACT president and senior analyst, July was essentially in line with, or slightly above, year-to-date trends.
The opportunity for bigger numbers is elusive due to the constraints of already-filled backlogs on order flows as well as the fact that the 2024 orderboards are not yet open or have just barely opened.
Some packages may be delayed in July because of the higher demand.
Starks said that the build slots for 2023 have already been filled, making it unclear when these orders will be slotted. The situation will clearly add pressure to increase production through the end of the year.
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