With August order and build volumes pushing backlogs to their annual nadir (and multi-year lows), “order season” has not been so important since the fall of 2016, according to the latest release of the North American Commercial Vehicle OUTLOOK by ACT Research. Excessive inventories cloud both the front and back ends of the demand arc.
“A year ago, the total Class 8 inventory was 61,800 units. At the end July 2024, the Class 8 inventory was a record 88,800 units, an increase of 27,000 units Y/Y. The increase has not been supported by demand, pushing stocks significantly above an inventory-to-retail sales inferred level,” Kenny Vieth, president and senior analyst of ACT Research, said. “The same exercise works in the MD market as well. From a near-record 77,800 units in July 2023, July 2024-ending stocks had risen to a new record 101,900 units, an increase of 24,100 units Y/Y.”
“We are sitting in the lull before a hoped-for sustained surge as ‘order season’ gets underway. September is the month in which seasonal factors flip from accretive to dilutive, though September’s factors are modest. The ‘season’ gets underway in earnest starting in October,” Vieth said. “While inventories are ultimately a headwind, the path of orders is foundational at this juncture: backlogs are low, and BL/BU ratios for Class 8 and trailers indicate unsustainable production levels relative to backlog support. Strong orders in Q4 and into Q1 are imperative.”
