OEMs are Not Taking TRACTOR Orders
Preliminary Class 8 truck orders declined in October 2021 from the previous month. While fleets are looking to add more trucks, many OEMs are not taking orders, or at least not as many orders, due to ongoing supply chain constraints.
FTR reports Class 8 net orders were down to 24,500 units in October, a 12% decline from September and 39% decrease on a year-over-year basis. The research firm says orders have stayed within the range of 23,000-28,000 units for 5 of the past 6 months due to OEM production challenges. Total Class 8 orders are at 437,000 units for the past 12 months according to FTR.
What are OEMs doing?
Component shortages plague OEMs, and FTR says first quarter 2022 production rates are currently uncertain because of these supply chain challenges as well as the added difficulty of worker availability.
“The OEMs are having tremendous difficulty planning production for Q1. Unfinished orders are rolling over from 2021 and there are fleets placing new orders for 2022 delivery. All these fleets are desperate for new trucks and the challenge for the OEMs is to book the maximum production possible without excessive overbooking,” said Don Ake, Vice President of Commercial Vehicles for FTR, in the research firm's press release announcing its October order figures.
The OEMs are using different methods in managing the backlog. Some are canceling 2021 orders and rebooking those orders in 2022, sometimes at higher prices, as commodity and other costs remain elevated. Others are only booking a limited number of orders every month.
“It is interesting that the order rate has been basically tracking the production rate since May, with a couple of exceptions. It indicates that the market is essentially frozen in this range of around 22,000-26,000 trucks. Without the clogged supply chain, production would be significantly higher, and orders would be elevated also.”
Supply-side constraints continue to pressure new order activity, there are significant backlogs and that is stretching into the second half of 2022 and still no clear visibility on the easing of the everything shortage.