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Uncertain times: Class 8 sales still constrained but inflation, high fuel prices, war in the Ukraine could cause changes

Uncertain times: Class 8 sales still constrained but inflation, high fuel prices, war in the Ukraine could cause changes
A volunteer of the Ukrainian Territorial Defense Forces stands next to his APC in Kharkiv, Ukraine, Wednesday, March 16, 2022. Half of the world’s supply of purified neon, an element used in the production of semiconductors, comes from two factories located in the Ukraine. Both have shuttered their operations as a result of the Russian military invasion of that country. (AP Photo/Andrew Marienko)

February U.S. sales of new Class 8 trucks were, as expected, subdued due to industry constraints.

Semiconductors are still hard-to-get items, and recent news indicates the problem could get worse. That’s because half of the world’s supply of purified neon, an element used in the production of semiconductors, comes from two factories located in the Ukraine. Both have shuttered their operations as a result of the Russian military invasion of that country.

It is not yet known when those companies will reopen, or whether they will do so under a Ukrainian or Russian government. Semiconductor manufacturers in Taiwan and China claim to have stockpiled enough neon to maintain production at current levels, but it isn’t clear how long the supply will last or when a shortage might impact the industry.

Truck manufacturers reported U.S. sales of 15,326 new Class 8 trucks in February, barely a 1% increase over January’s 15,208, according to data received from industry analysts at ACT Research. Sales dropped 2.5% from February 2021, when 15,726 trucks were sold.

Of the February sales, 11,605 were destined for the over-the-road (OTR) market while 3,721 went to the vocational market to be equipped with dump, concrete, trash or other bodies. Only six more OTR trucks were sold than in January, an increase of just 0.1%. Vocational truck sales, month to month, increased 3.1% but were 13.7% behind sales of 4,310 in February 2021.

Inventories at dealers and vocational body manufacturers are at bare minimums across the board. About 17,000 trucks fit the category nationwide, but nearly all of those are in stages of dealer prep or being fitted for vocational work. For the most part, those trucks are already spoken for and are no longer on the market.

So far in 2022, production has outpaced sales, according to Kenny Vieth, president and senior analyst at ACT Research. So, why weren’t more trucks sold? According to Vieth, it comes down to staffing.

“The body builders are set up to work at the level we’ve been working at, not the level we’ve been working at plus 20%,” he said. “And you’ve got more trucks for the dealer to prep. So, a lot of trucks are stuck at the dealerships and OEM plants waiting for these process things.”

With so much uncertainty in the market, dealers and body manufacturers may be hesitant to increase staffing for what might be a temporary rise in production at the OEMs.

Prices for used Class 8 trucks continued their upward trend, according to ACT’s latest “State of the Industry: U.S. Classes 3-8 Used Trucks.” The average retail price in February was 8% higher than January and an eye-popping 85% higher than in February 2021, despite being 3% older and with 7% more mileage.

Demand for both new and used trucks is still high, fueled by record freight rates over the past year. While large carriers complain about a driver shortage, new records were set in both 2020 and 2021 for new carrier registrations. However, the days of record rates could be starting to slow.

The culprit is higher fuel prices.

According to DAT Trendlines, spot rates for both dry van and temperature controlled freight dropped in February, and both have fallen farther in the first half of March. Only flatbed rates have increased. At the same time, fuel pricing — and fuel surcharges — have been on the increase.

Higher fuel prices undoubtedly impact the total cost of operation for truckers, but they create another issue.

“The more gasoline and diesel cost, there’s less money to buy goods,” Vieth said. “Members of businesses can’t spend on stuff because they’re spending the money on gas and diesel.”

But consumers are impacted, too.

“If gasoline costs an extra dollar per gallon for the year, there’s $135 billion that’s gonna get spent on gasoline, as opposed to on a Coke and a hamburger,” Vieth said. “If consumers are spending more to fill gas tanks, they’ll be spending less on goods that are shipped by truck.”

According to the U.S. Energy Information Administration, the national average price per gallon for gasoline has risen $1.46 in the past year — and it has skyrocketed by 70 cents during the first two weeks of March alone. Diesel fuel has fared even worse, rising $2.06 per gallon in the past year and $1.15 in the first two weeks of March.

When consumers have less money to spend, freight levels fall and there are fewer available loads, driving freight rates downward. It may be too soon to predict an end to the good times, but the upward trajectory of freight rates seems to have leveled off. If fuel prices continue climbing, a market change could become reality.

Freightliner truck
In February, Freightliner sold 5,891 Class 8 trucks on the U.S. market. That number is a decline of 9.6% from January sales of 6,524 and a 5.7% drop from February 2021, when 6,247 trucks were sold. (Linda Garner-Bunch/TheTrucker)

As for the individual OEMs in February, Freightliner sold 5,891 Class 8 trucks on the U.S. market, according to information received from Wards Intelligence. That number is a decline of 9.6% from January sales of 6,524 and a 5.7% drop from February 2021, when 6,247 trucks were sold.

Mack experienced a 43.9% sales improvement with 983 trucks moved in February compared to 683 in January. Compared with February 2021, Mack sales declined 16.8%. Volvo also saw month-over-month improvement with sales of 1,625 compared to 1,404 in January for a 15.7% increase.

International truck sales fell 22.4% in February with sales of 1,514 compared to 1,950 in January.

Kenworth’s 2,118 trucks sold was a decline of an even 100 trucks from January sales for a 4.5% drop. Peterbilt had a great month, however, selling 2,327 trucks for a 43.4% improvement over January’s 1,623.

Western Star sales of 458 in February represented a decline of 18.9% from January sales of 565 trucks. Compared with February 2021 however, sales increased by 42%.

Sales of new trucks are expected to remain somewhat constrained as shortages of materials and components — especially semiconductors — continues. Inflation, especially in fuel prices, could have a huge impact on the market in coming months.

Cliff Abbott

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.

Avatar for Cliff Abbott
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.
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