Class 8 trucks orders in queue look healthy heading into the new year even as a September order record resulted in lower but still solid bookings in the last three months of 2022.
“The demand that we saw out there for ’22 that none of us were able to build, that will continue in ’23,” John O’Leary, president and CEO of Daimler Truck North America, told FreightWaves. “They’re very committed to make those buys this year regardless of what the economic headwinds may look like.”
The average age of trucks has risen because parts and labor shortages crimped the OEMs’ ability to meet demand. Keeping trucks beyond the traditional three- to four-year trade-in cycle resulted in higher operating costs because of additional maintenance and parts replacement.
‘They want to get into younger products’
“They want to operate in a bandwidth that they’re more comfortable with. And so they want to get into younger products and they have the capital to do it,” O’Leary said.
After a record 53,000 September orders, new bookings slowed in the fourth quarter, falling in October, November and December.
“Backlogs are still elevated but not at such a level that they can sustain significant deterioration without impacting production output,” said Jonathan Starks, FTR Transportation Intelligence CEO. “The heavy vehicle market remains strong despite economic and financial uncertainties, and production will still be limited to some extent by supply chains and labor.”
Supply chain issues easing
The supply chain whack-a-mole of the last two years is easing, O’Leary said.
“We do expect some better performance from the supply base than we’ve seen,” he said. “The chip side of that has not gone away. But it is far less of an issue than it has been.”
As they usually do in reporting preliminary sales, FTR and competitor ACT Research differed in their estimates.
FTR pegged Class 8 orders in December at 28,300, falling 21% from November but up 25% compared with November 2021. On a moving 12-month basis, orders totaled 302,000 units.
ACT reported 30,300 orders in December, down 26% month over month. September’s bonanza of bookings eases concern of a negative trend developing.
“We’re inclined to view December’s order intake as a solid end to a robust final four months of the year,” said Eric Crawford, ACT’s vice president and senior analyst.
Cleaning up the orderboards
The two forecasting firms agreed that cancellations and orderboard cleanup likely impacted the December numbers. Specifics await the tallying of final orders.
Production slots for the first half of the year are full and the second half of the year is starting to fill up as well, Starks said. Orders align with sales and production levels, so further reductions in incoming orders would eat into backlogs.
That’s unlikely, barring an economic meltdown or other calamity, O’Leary said.
“From where we sit right now, the year is going to be just as strong in ’23 as it was in ’22,” he said.
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