According to ACT Research’s latest State of the Industry: NA Classes 5-8 report, Class 8 cancellations have generally been at non-event levels since the month after the COVID-19 pandemic started, with a roughly 5.7% order cancellation rate since April 2020. However, data from October and November of 2021 tell a new and different story.
“Between this month’s cancellations and the restatement of October’s volume, we have to go all the way back to Q3 1995 to find a month, or two, to rival current cancellation volumes,” Kenny Vieth, president and senior analyst at ACT Research, said. “In November, cancellations jumped to a second-highest ever 18,874 units. October’s cancellation volume was restated to 16,938 units. Order cancellation rates for the two months rise to 42% and 66%, respectively, and as a percentage of the Class 8 backlog, November’s cancellations were 7.1%.”
“In addition to Class 8, medium-duty cancellation rates were also higher this month, with the cancellation volumes rising to a 13-plus year high 4,545 units. With still strong new order intake, the cancellation rate jumped to [a] 19-month high 16.5%.
“We believe that it is essential to highlight that unlike previous periods of elevated cancellation activity, this massive spike in cancellations was driven not by customers saying, ‘I don’t need that truck,’ but rather by the OEMs who have been unable to build and deliver backlogged orders in a timely fashion. Because of the everything shortage that has plagued industry production since early in the year, considerable volumes of planned 2021 units have had to be cancelled and rebooked as new model year units scheduled to be built in 2022. Again, we reiterate, these are not cancellations driven by flagging new vehicle demand, which remains rock solid.”
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