U.S. sales of new Class 8 trucks rose by a whopping 35.8% in March compared to February sales figures, but the increase isn’t a sign that production is returning to pre-COVID normal. According to Kenny Vieth, president and senior analyst at ACT Research, much of the increase was seasonal.
“It’s certainly better news, but truckers just don’t buy a lot of trucks in January and February anyway,” he said.
The last month of each quarter is usually strong for sales, as carriers use truck purchases to adjust quarterly financial results. The calendar gets some credit, too. This year, March contained 23 working days compared to 20 for February, increasing production days by 15%.
The 20,813 trucks reported sold by manufacturers in March topped February’s 15,326 by 5,487. That number, however, was 7.5% lower than the 22,512 trucks sold a year ago, in March 2021.
Of the trucks sold, 15,536 were road tractors while 5,277 were vocational, destined to be fitted with dump, trash, concrete or other bodies.
Production is still hampered by shortages of semiconductors, plastics, steel and other components — but there’s a new twist.
The Russian invasion of Ukraine has halted the production of neon production in that country. Neon is used in the production of semiconductors, and half of the world supply comes from Ukraine.
“I think there’s still neon in the supply chain right now, but if (it’s) half the planet’s supply of neon, I don’t think it’s something you could snap your fingers and make up,” Vieth said. “As we look to the second half of the year, that’s a concern.”
Another supply-chain issue that’s likely to get worse is the resurgence of COVID-19 in China.
“Shanghai just entered their fourth week of lockdown,” Vieth said. “There are 42 cities in China right now that are locked down with a total population of 375 million people.”
That’s an issue for truck builders that order subassemblies from China, especially in electronics.
“The deck appears to be stacked against any strong rebounds in the near term,” Vieth added.
That’s not all.
President Joe Biden recently issued an executive order requiring that only steel manufactured in the U.S. be used for federal construction contracts greater than $35 million. U.S. made steel is already among the most expensive in the world, and the new requirement will result in higher costs for infrastructure projects. It will also drive more buyers to the global market, driving prices up there too.
In the meantime, the backlog of new trucks ordered but not yet built sits at 251,100 for all of North America. That’s about 11 months of production — if no further orders are received.
Several sources have published opinions that the days of plentiful freight and record-setting rates are nearly over. Rate increases have slowed in the spot market and fuel costs have skyrocketed. Owner-operators who paid premium prices for trucks and are now absorbing increased fuel costs will find profit margins squeezed as the market adjusts.
While there are some doom and gloom predictions, Vieth says ACT is still somewhat bullish on the market.
“To the extent that there is a freight correction or a supply-demand relationship correction, based on what we know right now we think it’s likely to be very shallow,” he said.
Truck prices continue to rise on both the new and used truck markets. Manufacturers may apply additional surcharges to prices to offset the costs of materials, surcharges from their suppliers and transportation costs.
“Then there’s the CARB regulation that starts Jan. 1, 2024,” Vieth said. “We think that’s a pretty expensive mandate for California and the states that have announced that they will follow the CARB requirements.”
According to Vieth, pent-up demand for new trucks will continue through the end of the year as carriers continue buying to replace aging equipment, and a pre-buy is possible as carriers stock up on 2023 models to avoid 2024 CARB requirements. Both of these conditions will help keep truck sales strong.
All of the major truck manufacturers saw increased sales in March, according to data received from Wards Intelligence.
Freightliner sales rose by 1,800, from 5,891 in February to 7,691 in March for a gain of 30.6%. Year to date, Freightliner has sold 20,096 Class 8 trucks on the U.S. market, down 10% from the same point last year but good enough for 40.0% of sales among all manufacturers.
Daimler-owned Western Star delivered 658 trucks in March for a 43.7% increase over February sales of 458. Year-to-date sales of 1,681 Western Star trucks are running 25.9% ahead of 1,335 sold at the same point last year, good for 3.3% of the new truck market in the U.S.
International’s 2,338 trucks sold in March beat February sales of 1,514 by 54.4% and were 1.9% better than sales of 2,294 in March 2021. Year to date, the company has sold 5,802 Class 8 trucks, good for 11.6% of trucks sold and an increase from the 10.1% market share at the same point of 2021.
Volvo sold 2,200 trucks in March, up 35.4% from February sales of 1,625 but 11.1% behind March 2021 sales of 2,474. Year to date, 5,229 Class 8 Volvos have been sold, good for 10.4% of the U.S. market but 10.3% behind sales a year ago in March 2021.
Mack Truck saw a sales increase of 26.8% with sales of 1,246 in March compared with 983 in February. Year to date, Mack sales of 2,912 lag behind the 3,897 sold at the same point of last year by 25.3% and their share of the new Class 8 market has fallen from 7.2% to 5.8%.
Kenworth sales of 2,987 trucks in March bested February sales by 41.0%. Year to date, Kenworth sales have improved 4.0% from the same point last year and the company holds 14.6% of this year’s market.
Peterbilt’s 3,239 units sold in March topped February results by 39.2% but year-to-date sales of 7,189 are down 13.1% from the same point in 2021.
Look for truck sales to keep lagging behind last year as manufacturers continue to struggle with supply chain constraints.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.