North American Class 8 truck orders drop 13% in July

North American preliminary net orders for heavy- and medium-duty trucks declined 13% year over year in July amid seasonal slowdowns, according to a recent report from ACT Research. 

Orders for heavy-duty Class 8 trucks totaled 13,400 in July, down 8% month over month, while orders for medium-duty Class 5 to Class 7 trucks plummeted 30% MoM to 14,200, according to the report. 

Orders declined across the board in June as well, according to ACT, with the heavy-duty market seeing the largest drops of 37% MoM and 12% YoY.  

While the order volume contradicts recent data suggesting that the freight industry may be turning the corner after a yearslong recession, it reflects seasonal woes typically culminating in July, ACT Research Vice President Steve Tam told Equipment Finance News. 

“When you’re looking at that sequential drop and also looking at it on a nominal basis, July is typically the weakest month of the year for order intake, not only in the medium-duty space, but I think it also is for the Class 8 side as well,” he said.  

The summer slowdown is largely the result of driver vacations and trucking companies planning ahead for the holiday season boom, Tam said. He attributed the drop in medium-duty orders to “automotive– centric dealers,” such as Ford, GM and RAM, looking at the model-year changes that typically occur in July. 

However, the slowdown may bolster sales activity in other industry segments, including maintenance and repair, as owner-operators take advantage of subdued freight movement, Chris Grivas, president of Chadds Ford, Pa.-based CAG Truck Capital, told EFN. 

“One of our big businesses is financing engines and engine overhauls, so we actually see an uptick during the summer months because of vacations,” Grivas said. “If you know you’re going to overhaul your engine, wouldn’t you rather do it when you’re planning on family vacation?” 

Inventory continues to mount 

Low order volume in July means high inventory for many dealers, prolonging a trend stemming from decreased consumer spending and lender repossessions. On-lot truck inventory increased 66.6% YoY and 9.7% QoQ in Q2, according to Work Truck Solutions.  

Supply chain issues in the truck-parts business have also contributed to mounting inventory, ACT’s Tam said. 

“On the chassis side, at the OEM [original manufacturing equipment] level, we’re still dealing with supply chain constraints,” he said. “They’re not nearly as frequent as they were, but there are still probably a couple hands-full of issues that are annoying and have the ability to shut production down, or at least prevent delivery of vehicles.” 

Tam said, for example, that many trucks are sitting while they wait for mirrors. A mirror factory in Mexico burned down several months ago, and mirror supply was already constrained, he said. 

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