If you have been following the news, you’ll know that there is a worldwide supply chain issue that is wreaking havoc on every sector. The shortage most notably reported is the shortage in semiconductors which affects just about everything in the world including cars and trucks. Most of you have wondered how badly this affects new truck builds but probably haven’t bothered to look because you have day jobs, which is why we’re presenting the analysis.
There’s a few numbers to look at: orders, sales, and backlog. Here are our observations.
Class 8 Truck Units
- Sales. Given the news of component shortages, one would expect that unit sales would be down. In fact, it’s the opposite. For January through August of 2021, sales of Class 8 trucks have been almost 146,000. For January through August of 2020, sales of Class 8 trucks were almost 114,000. Even if we normalize those numbers for the dip due to COVID shutdowns, and order reductions, this year is still substantially ahead of last year’s unit sales.
- Orders. The lowest monthly orders since the beginning of last year was in April 2020 for just over 4,000 Class 8 trucks. In November and December of 2020, monthly orders were EACH approximately 52,000, a 13 times increase from April 2020. September of 2021 is the first month we have seen where the monthly orders were lower than they were from the same month in the previous year. So maybe there is a light at the end of the tunnel for Class 8 trucks.
- Backorders. If we subtract the cumulative monthly sales from cumulative orders to obtain backlog, we can see that the backlog has risen at an absurd rate since October of 2020. The continual increase in orders and inability to keep up with those orders shows a cumulative backlog of 286,000 units. At the current build level, that will take 16 months for any orders being placed right now to be built.
Trailers
- Orders. The lowest monthly orders since the beginning of last year was in April 2020 for just over 469 trailers. In October 2020, monthly orders peaked at approximately 56,000, a 119 times increase from April 2020! June 2021 is the first month we have seen where the monthly orders were lower than they were from the same month in the previous year. So maybe there is a light at the end of the tunnel with trailers as well.
- Backorders. If we subtract the estimated monthly trailer manufacturing capacity of 20,000 (less during the initial COVID months) from cumulative orders to obtain backlog, we can see that the backlog has risen at sharp rate since October of 2020. The continual increase in orders and inability to keep up with those orders shows a cumulative backlog of 124,000 units. At the current build level, we estimate it will take 6 months for any orders being placed right now to be built.
In summary, backorders are tremendously high and barring any significant cancellations, demand for parts in the OEM will continue to be strong for at least another 16 months. Demand for new trucks has been slowing down compared to the end of last year and earlier this year. However, orders for new trucks are still outpacing pre-COVID demand. Since there is a finite capacity for OEM and aftermarket parts combined, this means the US aftermarket will likely continue to be constrained with replacement parts for at least another year.
