According to ACT Research’s (ACT) latest State of the Industry: NA Classes 5-8 report, current economic conditions are proving resilient in the face of aggressive interest rate hikes. Heavy duty 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.
“For now, business activity is winning the tug of war with higher interest rates. That said, we expect this dynamic to shift in 1H’23, as the Fed continues its aggressive push to subdue inflation,” said Eric Crawford, vice predsident and senior analyst, ACT Research.
About September, Crawford noted the record-setting Class 8 order activity. “Production levels were ahead of OEM build plans for both heavy-duty (HD) and medium-duty (MD) by a considerable margin. Otherwise, activity was largely in line with expectations: 1) more Class 8 OEMs began opening 2023 orderboards, and 2) 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 concluded, “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.”
