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THETRUCKER.COM
EQUIPMENT & TECH
JULY 2022 • 17
Manufacturing dilemma
INDUSTRY ANALYSTS SAY MORE THAN 21,000 NEW TRUCKS SOLD IN MAY WHILE ORDERS DECLINED
CLIFF ABBOTT | CONTRIBUTING WRITER
May sales of new Class 8 trucks on the
U.S. market increased by 7.6% in May over
April sales figures, according to data received
from ACT Research. Sales of 21,272
units made May the best month of the year
so far — and the best May since 2019. May
was also the first month when sales exceeded
those in the corresponding month in
2021, when 18,761 trucks were sold.
So, how did OEMs sell more than 21,000
trucks in a month when just 19,500 were
built?
“We’ve been seeing inventory building
and you wonder, with demand so strong,
why is inventory continuing to grow?” said
Kenny Vieth, president and senior analyst at
ACT Research.
Part of the answer is that many trucks
were nearly completed in previous months
and then parked at the factory or the dealer,
waiting for a final part or two to come in before
delivery to the customer.
“It shows maybe some parts finally made
it to the supply chain,” Vieth added.
Of the new Class 8 trucks sold, 16,402
(77.1%) were fifth-wheel equipped over-theroad
tractors, while the remainder were vocational
models with dump, concrete, trash
or other bodies mounted.
Freightliner led the charge, reporting
sales of 7,309, according to data received
from Wards Intelligence. Compared to
April’s 6,653, Freightliner sales increased
6.9%.
The biggest growth of sales by percentage,
however, went to International, which
reported sales of 2,799 — an increase of
46.5% over April’s 1,911.
Kenworth’s 2,803 units sold topped
April’s 2,588 by 8.3% but lagged behind May
2021 sales of 2,919 by 4%. PACCAR sibling
Peterbilt reported sales of 3,375 trucks in
May, a 6.4% climb from 3,173 sold in April
and 15.1% better than the 2,933 sold in May
2021.
Volvo reported sales of 2,546, topping
April sales by 121 trucks for an increase of
5%. Compared with May 2021, when 1,413
Volvos were sold, sales increased by a whopping
80.2%. Volvo-owned Mack Truck reported
sales of 1,372, a decline of 5.2% from
April’s 1,448 trucks sold.
Western Star, a Freightliner company,
sold 511 units in May, down 23.7% from
April’s 670. Still, sales bested the 447 sold in
May 2021 by 14.3%.
Truck manufacturers have been hampered
for more than a year by supply chain
issues. Semiconductors are in short supply,
and components needed to build trucks
have been delayed by COVID closings. Materials
such as steel and aluminum have
been hard to come by and expensive when
available.
To counter supply chain issues, OEMs are
taking some unusual steps. Some are building
trucks that are parked on the lot, waiting
for a final component to arrive. Once
the parts are available, they can quickly be
installed and the trucks moved out.
Another tactic is to simply sell trucks
without some of the options. Trucks have
been delivered to carriers without window
actuators, ADAS features such as adaptive
cruise control, and even without passenger
seats.
Orders for new trucks have far outstripped
production, resulting in wait times
of a year or longer for delivery.
FTR reported that new truck orders are
dropping to levels far below last year’s pace,
but part of the reason is that OEMs are reluctant
to book orders so far in the future.
“The supply chain was making slight
improvements in the last few months,” said
Don Ake, vice president, commercial vehicles
for FTR. “The OEMs are not confident
they can increase production in the second
half of the year; therefore, they are not able
to take more orders.”
In the used truck market, prices have
reached record levels. One reason is that
some carriers turned to used trucks when
they couldn’t get new trucks to expand
their fleets. Another reason, judging from
the record numbers of new carrier registrations
granted by the DOT last year, is drivers
buying trucks and starting their own companies
to take advantage of surging spot
freight rates.
The pendulum has swung the other way
in the trucking industry as rising fuel costs
and falling rates have made it more difficult
for small trucking businesses to profit. Large
numbers of them are closing their doors.
Avery Vise, vice president of trucking at
FTR, addressed the issue in a June 6 podcast.
“Net revocations of for-hire authority
approached 9,300 (in May) and were more
than double the number recorded in April
and were a record,” he said, pointing out
that most revocations are made due to insurance
lapses, which have a 30-day grace
period.
“Most of the operations that had authority
revoked in May probably already failed
in March and in April. I’m sure that most
of them probably stopped operating in that
first two weeks after the surge in diesel prices,”
Vise concluded.
A June 15 press release from ACT Research
was entitled, “US Used Truck Sales
Cycle at the Beginning of the End.” The release
predicted that used truck prices have
reached a peak and will soon begin coming
down.
Unfortunately, rising fuel costs, falling
iStock Photo
According to industry analysts, May sales of new Class 8 trucks on the U.S. market increased by 7.6% in May over
April sales figures. Sales of 21,272 units made May the best month of the year so far — and the best May since
2019. May was also the first month when sales exceeded those in the corresponding month in 2021, when 18,761
trucks were sold.
freight rates and rising interest rates seem
to conspire against a truck purchase. On
June 15, the Federal Reserve raised its key
interest rate by .75%, the largest increase
since 1994. Fed chair Jay Powell said that
a similar hike is possible at the Fed’s next
meeting in July.
“By raising interest rates, the Fed is
hitting the economy’s brakes to slow the
economy down. So, that’s, going to add to
the problem of declining freight,” explained
Vieth.
Recession is very possible, Vieth said. At
least, a freight recession. As consumers spend
more of their dollars on fuel and food, less is
left over to purchase goods that truckers haul
as freight.
“Because the freight cycle has been
growing for two years, and, is due for a rollover,”
Vieth continued. “The roll off is occurring
almost exactly when we thought it
was going to. What’s different is the speed
at which the roll off is occurring is much
sharper than our forecasts were originally
anticipating.”
Nobody knows how long the trucking
downcycle will last, or how deep it will go, but
for now, investing in new equipment remains
an expensive proposition with little guarantee
of profits in a tightening market. 8