According to ACT Research’s latest State of the Industry: NA Classes 5-8 report, the most notable data points this month were heavy duty and medium duty retail sales, which were each up by double digits on a year-over-year basis. Heavy-duty cancellations moderated month over month and backlog continued to trend lower, but units scheduled for Q2/23 took a meaningful step higher. Coupling the annual seasonally weak period for orders (typically April through August), with a healthy supply chain enabling and elevating production, the Class 8 backlog should be on a downward trajectory until 2024 orderboards open, according to ACT Research.
“May’s backlog met expectations, down 13.9K units month over month to 189.2K, and the backlog-to-build ratio decreased 30 basis points month over month to 6.7 months (7.0 seasonally adjusted),” Eric Crawford, vice president and senior analyst at ACT Research, said. “Heavy-duty and medium-duty production were essentially in line with build plans. May’s Class 8 build rate was a healthy 1,343 units per day, representing the ninth month in the past 12 where build rate exceeded 1,300 units per day.
“Heavy-duty retail sales remain robust, up 14% year over year at 29,700 units, seasonally adjusted, equivalent to a 357K SAAR. Seasonally adjusted, sales have exceeded 29K units in five of the past six months. Classes 5-7 retail sales were up 26% year over year at 22,800 units.
“We expect positive momentum to slow in Q2/23 (more so in Q4). Already, one of the critical components of heavy vehicle demand, carrier profitability, is increasingly under pressure. In Q1, the public carriers’ profits declined to levels last seen in early 2020. While some of the decline was seasonal, public TL carrier margins were down 250 bps year over year. With contract rates expected to deteriorate into Q4, profit margins should continue to narrow.”
