In the release of its Commercial Vehicle Dealer Digest, ACT Research reported that the setup for the entire commercial vehicle industry remains unchanged. Despite rock-solid demand metrics across the spectrum of medium- and heavy-duty vehicle types, industry capacity remains range-bound across a broad front of supply-chain constraints.
“Demand-side activities remain at as-good-as-it-gets levels. Front-side industry metrics remain hot, even as Class 8 and trailer orders have moderated in recent months due to heavily-filled and oversubscribed 2021 backlogs, just opening 2022 order boards, difficulties establishing pricing on spiraling commodity prices and production uncertainty relating to parts availability,” said Kenny Vieth, ACT’s president and senior analyst. “One example is the three-year 300k-400k mile tractor sliver of the market, whose constituent average broke through $100,000 for the first time ever in August.”
About the supply side, Vieth commented, “Given all they touch, semiconductors remain the primary culprit in automotive supply-chain woes. While they have become a generic reference to the supply chain’s shortcomings, in actuality there are scores of parts that continue to be impacted by the pandemic, by the lingering impact of steel tariffs which have domestic steel prices well above other global benchmarks, and the February storm that incapacitated Texas and shut down swathes of the US plastics industry for two-plus quarters. Aluminum extrusions are a challenge, wire is hard to find, and tires have been mentioned since day one of the new cycle. And, reiterating, like the supply-chains themselves, the issues are not only domestic and not only commercial vehicle.
“Even as some companies wrestle with insufficient capacity, other companies who make ‘dumb’ products are swimming in inventory, having gotten their line rates to speed, only to find the rest of the industry could not deliver. Some suppliers are contemplating layoffs, as they swim in inventories while waiting for the rest of the industry to engage.”