ACT Research announced Thursday the convergence of continued strong build rates, a fading U.S. tractor sales trend and early in the year sales seasonality risk a Class 8 inventory surge in the first quarter that could lead to a slowdown in production levels.
The company says some of that dynamic can already be seen with more inventory being accumulated the past two months ending November (4,300 units), than the 3,300 units that were accrued in the preceding 12 months.
“Something we marveled at, as late as this September, was the close correlation between build and sales that had kept Class 8 inventory levels, both nominal and relative, near perfectly positioned very late into the cycle,” says Kenny Vieth, ACT Research president and senior analyst. “Increasingly, with inventories already rising and the sales calendar becoming unfriendly in early 2024, the data suggest this cycle will not provide an it’s different this time outcome.”
[RELATED: Vanguard acquires Nacarato Truck Centers]
Vieth does note the silver lining, if one exists, is that much end-of-2023 inventory build occurred in California because of complex regulations implemented by the state's Air Resources Board that went into effect in January.
“The Class 8 forecast has anticipated a production slowdown beginning in Q1,” says Vieth. “As any significant inventory stockpiling won’t occur until January and February, we are probably early in our call for build rate cuts sooner. The U.S. Class 8 tractor sales rate has been trending lower since Q2 2023, and even in good markets, January and February are far and away the worst months of the year for retail sales.”
