Dive Brief:
- Truck manufacturer PACCAR's order backlog is "substantially full for the year in Europe and North America" as unknowns surrounding parts availability and cost have kept it from fully opening its 2023 order board, CEO Preston Feight said on the company's Q1 earnings call.
- "I think in today's environment, we could easily get more order bookings than we need but it's a function of, well, filling the backlog with strong business and not getting exposed out to 2023, where we don't know exactly what costs are going to be," Feight said.
- PACCAR has also translated cost increases into price hikes for its aftermarket parts business in a time of high demand. President and CFO Harrie Schippers said Q1 parts pricing was more than 10% higher YoY. "The average age of the trucks is going up. They consume more parts," he said.
Dive Insight:
Manufacturers are cautious about pushing their backlogs out too far in the future as the health of supply chains remains in question. Preliminary Class 8 net orders in North America came in at 21,500 units in March, down 47% YoY, according to FTR. Orders are expected to stay in that range until OEMs become more confident.
"Once supply chain issues improve, OEMs will be able to substantially increase orders," Don Ake, VP of commercial vehicles at FTR, said in a statement. "But until then, conditions remain stagnant. Several automakers recently announced computer chip supplies remain tight, but there are still expectations of supply chain improvements in the second half of the year.”
An industry-wide undersupply of semiconductors has hampered production. But Schippers said this has presented a "silver lining" of increased used truck demand for PACCAR, which sells trucks under the Kenworth, Peterbilt and DAF nameplates.
However, Feight noted that securing enough semiconductor supply has become less of an issue for PACCAR of late. In its place is a mix of broader supply chain challenges.
"They could be labor related. They could be geopolitically related. They could be shipping related," Feight said.
Despite looming supply chain concerns, PACCAR estimates Class 8 truck industry retail sales in the U.S. and Canada will range between 260,000 and 290,000 in 2022. That range is slightly above the 250,000 units sold in 2021.
"All conversations with the customers are that they really need trucks and continue to do so," Feight said. "So the backlog feels solid."
