The commercial trucking market took a step back in October, but soft pricing and reduced interest rates hint that a demand surge is on the horizon.
Preliminary heavy-duty Class 8 truck orders in North America fell 5.2% year over year and 17.5% month over month in October to 30,600 units, according to a Nov. 4 report by ACT Research. That followed increases of 0.3% YoY and 128.3% MoM in September to 37,100 units.
Order volume and used–truck sales have been seesawing in recent months as the industry gradually recovers from a yearslong recession that was triggered by oversaturation and supply chain disruptions during the pandemic. But improved consumer sentiment following recent Federal Reserve interest rate cuts and the presidential election signals that the industry may be in “the ninth inning of this trucking slowdown,” Matt Manero, president of Carrollton, Texas-based Commercial Fleet Financing, told Equipment Finance News.
“Interest rates coming down is going to spur homebuilding and homebuying,” he said. That “means a lot of stuff is going to get shipped on trucks. So, I feel unbelievably positive for 2025. … This is one of the best confidence moments that I’ve had in 30 years in business that the future is going to be fine. So, let’s make moves.”
While delinquency rates are high, hovering above 5% in some truck lenders’ portfolios, that typically indicates the tail end of a cycle, Manero said.
Meanwhile, preliminary medium-duty Class 5 to Class 7 orders dropped 27% YoY and 16.8% MoM in October to 15,900 units, according to the report. In September, medium-duty orders fell 19.7% YoY but rose 10.4% MoM.
Higher loan volumes, lower yields
Truck financing activity is poised to pick up in the fourth quarter as market conditions improve, Manero said. However, financing margins are likely to remain low until the Fed’s rate cuts fully take hold.
“We’re winning deals at lower margins than we would have necessarily liked to, but we want the business,” he said. “We want to work for that customer for their second, third and fourth purchase. … But that’s happening across the board, and all of the lenders are doing that. They’re doing deals that yield lower than they would like just because they need the volume.”
Financing at lower margins is also more common in the fourth quarter as lenders work to beef up their yearend numbers, Manero said.
