We all know new truck orders have been through the roof and deliveries have been inadequate to meet demand, resulting in extremely long lead times. How does the current environment compare to recent cycles? A historical comparison provides context.

Prior to 2018, the most recent order peak was in October of 2015, with 45,795 trucks ordered. Actual deliveries never got close to that number, hitting 25,369 in June of 2016. So peak-to-peak, the highest delivery month was only 55% of the highest order month. Expanding the view to 12-month orders vs. deliveries, orders in 2015 numbered 275,164 while deliveries the following year numbered 198,315. So 12-month deliveries were 72% of orders.

Fast-forward to the current period. July was the most recent peak order month, at 52,629. The most recent peak delivery month was August, at 23,912. So monthly peak deliveries are running at 45% of peak orders, suggesting monthly build is still 10% inadequate based on precedent. We’re not going to bother with a year-to-date 2018 vs. 2017 comparison, since the current order cycle didn’t really explode until late in 2017. So that figure wouldn’t be of much use.

One major difference in 2018 vs. 2015 is the number of trucks needed. The ELD mandate combined with three years of economic improvement has likely created a need for roughly 25-50% more trucks today. That means the peak delivery month in the current cycle could theoretically be in the 31,700-38,050 range (which is probably not going to happen, since OEM’s are not likely to hire an entire shift’s worth of assembly line workers). On an annual basis, 2018 deliveries could theoretically surpass 300,000 units (which, again, is not going to happen) and still not meet demand. And this year is actually running 6% behind last year.

So OEM’s clearly have considerable headroom before they need to start rolling back production. This is why most analysts have a favorable view of new truck conditions into the second quarter of next year.