Truck lead times shorten
April 24, 2012
For trucks ordered in March, the calculated average time from order to delivery dropped once more and now sits at just 4.4 months. Once again, this is the lowest level since late in 2010. The six month average is now well below 5.0 months. Prior to last August this metric had hovered near the 6 month mark for 8 straight months. A reading near 5.0 suggests that production levels are generally sufficient to meet current demand. Above 6.0 means that production levels are likely to be increased and below 4.0 means that production levels are likely to be cut.
There are still 18,000 available slots in the second quarter. March order activity was not good for Q2 production. There were essentially no orders placed for Q2 delivery. As of now, there does not appear to be a problem getting trucks when needed.
With truck orders weakening and build remaining strong the backlog of un-built trucks has noticeably fallen. If orders remain sluggish and production stays near current levels, it will quickly erode the backlogs on the books.
Looking at the backlog-to-build ratio, we can see that it is now approaching levels that suggest lower production levels will be needed by the industry shortly. The latest backlog-to-build ratio was 4.4 in March. A reading near, or below, 4.0 has historically indicated that production levels need to be cut. This measure has been moving lower since the middle of 2011 and is now at its lowest level since November 2010. It is certainly not indicating that a production increase is necessary right now.
- Source: FTR Associates’ OEM Market Indicator Database
- The graphed data is for total N.A. backlogs/build ratio. This includes U.S., Canada, Mexico, and Export data
- The market indicator data includes all major North American truck builders.
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