COLUMBUS, Ind — The trucking industry revolves around the Class 8 tractor — it’s America’s iron workhorse, helping to deliver necessary goods across the nation each day.
But the latest data from ACT Research shows that while new tractor orders are strong, used units aren’t moving at the pace they once did.
While preliminary used Class 8 tractor retail sales volumes decreased 9% month-over-month in September, according to ACT, new Class 8 tractor orders rose from August to September in spite of interest rate hikes. September new Class 8 orders totaled 53,700 units, according to ACT.
NEW TRACTOR SALES
Heavy and medium duty net orders both took giant steps up from August levels in September, both on a nominal as well as seasonally adjusted basis, according to ACT.
“For now, business activity is winning the tug of war with higher interest rates,” Eric Crawford, ACT Research’s vice president and senior analyst, said. “That said, we expect this dynamic to shift … as the Fed continues its aggressive push to subdue inflation.”
Additionally, Class 5 and Classes 6-7 are segmented by trucks, buses, RVs and step van configurations, while Class 8 is segmented by trucks and tractors with and without sleeper cabs.
This report includes a six-month industry build plan, backlog timing analysis, historical data from 1996 to the present in spreadsheet format, and a ready-to-use graph package. A first look at preliminary net orders is also published in conjunction with this report.
Crawford said production levels were ahead of OEM build plans for both heavy-duty and medium duty by a considerable margin.
“Otherwise, activity was largely in line with expectations: one, more Class 8 OEMs began opening 2023 order boards, and two, HD and MD cancellation volumes and rates remain low, albeit up from prior month for Class 8 following the record low set in August.”
Crawford said that while underlying economic activity remains elevated, the record-breaking orders were also a function of customers’ inability to secure as much equipment in 2021 and 2022 as they’d preferred, creating pent-up demand for 2023, as well as a burst of activity when 2023 order boards were opened more broadly.
“In other words, had supply chain and labor issues not dampened 2022 build rates, or had 2023 build slots already been widely available for orders to be placed, we think orders would have been strong, but not record-breaking strong,” Crawford said.
USED TRACTOR SALES
Preliminary used Class 8 tractor retail sales volumes decreased 9% month-over-month in September from August.
September 2022 sales were also 29% lower compared to September of 2021, according to ACT.
Other data from August 2022 to September 2022 showed that the average retail price for used Class 8 tractors fell 3%, average miles increased 2% and average age contracted 4%.
Compared to August of 2021, the average retail price was 18% higher, with average miles and age both greater by 3% and 1%, respectively.
“Retail unit sales reflect the challenges of both waning demand, as well as the curtailed flow of units coming from trade-ins,” Steve Tam, vice president at ACT Research, said. “Encoded in the supply-demand dynamics, the impact of pricing is to the downside.”
Tam said the final interpretation depends on one’s role as a buyer or a seller.
“Miles and age appear to be holding less sway over pricing but are also arguably mixed. Looking ahead, prices are likely to continue their downward trek into the first half of 2023, before starting to head higher, predicated on underlying economic and freight assumptions,” he said.
Relating to new truck builds, Tam said that if history is any indication, September new truck builds, which totaled nearly 26,000 units, will translate into a meaningful uptick in the market in November or December once those units have worked their way through repair and reconditioning.
“Of course, this assumes there are customers lined up with dollars (or financing) in hand to put those units to work,” he said. “Given supply has been a bigger issue than demand, which is probably a safe assumption.”
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.