The convergence of continued strong build rates, a fading U.S. tractor sales trend and early-in-the-year sales seasonality risk a Class 8 truck inventory surge in Q1/24, according to ACT Research. Some of that dynamic can already be seen, with more inventory accumulating the past two months ending in November — 4,300 units — than the 3,300 units accrued across the preceding 12 months.

“Something we marveled at, as late as this September, was the close correlation between build and sales that had kept Class 8 inventory levels, both nominal and relative, near perfectly positioned very late into the cycle,” Kenny Vieth, president and senior analyst of ACT Research, said. “Increasingly, with inventories already rising and the sales calendar becoming unfriendly in early 2024, the data suggest this cycle will not provide a different outcome, with more inventory accrued in the last two months than the preceding twelve months.

“If there is a silver lining, we assume that much of the end-of-2023 inventory build occurred in California because of expensive and complex CARB regulations that went into effect in January. The Class 8 forecast has anticipated a production slowdown beginning in Q1. As any significant inventory stockpiling won’t occur until January and February, we are probably early in our call for build rate cuts sooner. The U.S. Class 8 tractor sales rate has been trending lower since Q2/23, and even in good markets, January and February are far and away the worst months of the year for retail sales.”