With the exception of maybe a couple of months, Class 8 cancelations have been at non-event levels since the month after the pandemic started, at about a 5.7 percent order cancelation rate since April 2020. However, October and November data tell a new and different story, according to ACT Research’s recent State of the Industry: NA Classes 5-8 Report.
“Between this month’s cancelations and the restatement of October’s volume, we have to go all the way back to Q3 1995 to find a month, or two, to rival current cancelation volumes. In November, cancelations jumped to a second highest ever 18,874 units. October’s cancelation volume was restated to 16,938 units. Order cancelation rates for the two months rise to 42 percent and 66 percent, respectively, and as a percentage of the Class 8 backlog, November’s cancelations were 7.1 percent,” says ACT President and Senior Analyst Kenny Vieth.
“In addition to Class 8, medium-duty cancelation rates were also higher this month, with the cancelation volumes rising to a 13-plus year high 4,545 units. With still strong new order intake, the cancelation rate jumped to 19-month high 16.5 percent,” Vieth says.
“We believe it is essential to highlight that unlike previous periods of elevated cancelation activity, this massive spike in cancelations was driven not by customers saying, ‘I don’t need that truck’, but rather by the OEMs who have been unable to build and deliver backlogged orders in a timely fashion,” he says. “Because of the everything shortage that has plagued industry production since early in the year, considerable volumes of planned 2021 units have had to be canceled and rebooked as new model year units scheduled to be built in 2022. Again, we reiterate, these are not cancelations driven by flagging new vehicle demand, which remains rock-solid.”
ACT’s State of the Industry: NA Classes 5-8 report provides a monthly look at the current production, sales, and general state of the on-road heavy and medium duty commercial vehicle markets in North America.