Class 8 Truck Production Predicted to Slow: What’s Going on in Heavy Trucking?

While the World Health Organization officially declared the end of the COVID-19 pandemic in May 2023, the trucking industry is still dealing with the consequences.

Supply chain shortages during the pandemic meant that truck build numbers plummeted with many manufacturers having to red-tag trucks while they waited for key components needed to complete the truck. Dealers and fleets were put on allocation with no real idea of the number of trucks they’d get, when they’d get them, and how they’d be spec’d out. Talk about a challenge.

This production reduction caused order boards to swell as fleets still had an appetite for replacement vehicles and, in many cases, fleets were looking to add vehicles to meet the increased demand of the pandemic-induced explosion of e-commerce.

Where Things Stand in Early 2024

Trucking adapted to the changes in demand including handling the increased tonnage. Now, demand has returned to more normal levels and will continue to react — as it historically has — to economic conditions.

Truck orders and sales are correlated to existing and anticipated freight demand. Reacting to the combination of high interest rates, uncertainty about the economy, and geopolitical unrest, fleets have curbed their new vehicle purchases. Class 8 trucks sales were down in January 2024, according to Wards Intelligence, as some carriers cut back on their capital expenditures.

However, January North America Class 8 net orders were 27,000 units, up 600 units from December and 45% from a year ago, according to ACT Research Co. . Some of these orders were placed by fleets trying to return to their normal purchase cycles and rid themselves of older trucks they were forced to keep because of the unavailability of new vehicles in previous years.

In addition, Eric Starks , FTR chairman of the board, told CCJDigital that, “Build slots continue to be filled at a healthy rate. With January orders coming in at a rate that was comparable to the previous month, the market is still performing at a high level historically.”

Truck makers are able to fill the build slots with delivery lead times in the six-month range. A lead time of greater than six months is good for a manufacturer as it indicates increased activity, while a lead time of between four and six months is the sweet spot, according to Starks. Troublingly, he indicated that lead time is trending lower.

A Look at the Future

Late last year, predictions favored a production slowdown, especially given that January and February have traditionally been the slowest sales months. Recently, ACT Research increased both its sales and production forecasts although not on the strength of the for-hire truckload market.

Ken Vieth, ACT’s president and senior analyst, said, “The 2024 market is atypically bifurcated: considerable strength remaining in U.S. and Canadian vocational market and Mexico helps offset otherwise weak demand in U.S. and Canadian tractor markets, LTL excluded.”

However, others don’t share that sentiment. S&P Global Mobility predicts that Class 8 registrations will dip this year, which would support a production decrease.

This year may be the calm before the storm as many industry observers are anticipating truck orders and sales to escalate in advance of 2027 emissions regulations. In its commercial vehicle forecast, S&P Global Mobility said, “Regardless of weight class, the more stringent environmental compliance will be the key driver in demand and production of all vehicle types. Upcoming regulations, specifically the proposed greenhouse gas emissions standards by the Environmental Protection Agency, are forcing traditional OEMs to reevaluate their manufacturing and investment strategies and prompting a potentially rapid shift from internal combustion engine products to electrified vehicles.”

Late last year, Starks said FTR expected production to total 245,000 units this year. This is a 26% decrease when compared to 2023’s numbers. But he expects truck builds in 2025 to reach 265,000 and explained that replacement demand is in the 225,000 – 250,000 range.

Speaking at an event at the Volvo Trucks Customer Service Center, Magnus Koeck, the manufacturer’s vice president of strategy, marketing and branding, predicted that the trucking industry will be resetting itself as it moves to decarbonize. Manufacturers must look at the product mix they offer, which could include battery electric trucks, hydrogen fuel cell trucks, and diesel-powered trucks.

Each truck maker is going to have to decide what percentage of its production will be dedicated to each powertrain option it’s offering, which may constrain some vehicle production.

And if the situation weren’t complicated enough, real concern remains about another wave of supply chain disruption caused by events on the Panama Canal or on the Red Sea.

The one certainty dealers can count on is the resiliency of the trucking industry, which has a track record of managing change and disruption.