Manufacturers building too many trucks
July 23, 2012
Truck manufacturers continued to overbuild in June. The lead time for getting an ordered class 8 truck remained below 4.0 for the second straight month and fell to 3.4 months. This is down a modest 0.2 from May but is more than 3.5 months shorter than where we stood one year ago when the lead time was 5.9 months. We have now been lower than at any time during the recessionary time frame of 2009-2010 when production was slashed dramatically. This metric has been under a reading of 5.0 for the last 5 months. A reading under 5.0 suggests that there is ample production capacity online to meet demand. As levels approach 4.0 (and we remain below that once more) it would suggest that there is excess production capacity online and manufacturers should be looking to cut production.
Putting off the pain
The lead time has fallen for the better part of the last year as OEMs have been slow to respond to weakening demand. Q3 open build slots were essentially unchanged from last month as manufacturers pulled as much production into Q2 as they possibly could – a short-term band-aid. The OEMs have finally started to realize the situation and are pulling their Q3 build plans lower, but they have further to go. Truckers can easily get a truck in the near-term – both from new truck orders or directly from dealer inventory. Inventory levels have moved noticeably higher over the last few months and pricing pressure is starting to build for dealers to start getting it moving out the door.
- 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.
Click the link below to print a print-friendly page of the this analysis.Print Page
Use our chart creator to generate charts using the data that was used in this analysis.TruckGauge Chart Creator
This functionality is only available to Premium Members. Please upgrade your account to gain access to the data used in this analysis.Upgrade to a Premium Member