Page 3 - NTDA TrailerTalk - December 2024

TRAILERTALK
FTR Reports U.S. Trailer Net Orders in November

Rose to 22,745 Units, Highest Total Since

December

U.S. trailer net orders in November rose 42% month-over-month
(m/m) and 6% year-over-year (y/y) to 22,745 units — the highest net
order total since December 2023 and welcome news given many
months of weak orders. However, the overall 2025 order season thus
far is shaping up to be well below expectations. A sluggish freight
market remains a challenge for the U.S. trailer demand, and the
opening of the 2025 order boards has seen continued weakness,
tempering the potential outlook for next year.

Total trailer net orders thus far for the 2025 order season (September–
November 2024) are down 42% y/y to 50,651 units, an average of
only 16,884 units per month. Total trailer build declined 20% m/m
in November to 13,238 units, down slightly more than the typical
seasonal m/m drop, and was down 43% y/y. This output is 41%
below the five-year average for November and marks the lowest
monthly production level since 2010.

In November, total trailer net orders were well above total
production, increasing backlogs by 10,124 units (+12% m/m) to 92,213 units. Lower m/m production and growing backlogs pushed the backlog/
build ratio up to 7.0 months, the highest reading since February 2024. This indicates some decreasing pressure on OEMs to scale back production
in the near term.

The commercial vehicle market continues to see a disconnect between demand for trailers and demand for trucks. North American Class 8 net
orders increased 2% y/y in September–November 2024 while U.S. trailer net orders dropped by 42% y/y during the same period. For-hire fleets
have been prioritizing investments in new power units over trailers in 2024 YTD, likely influenced by reduced profitability or shifts in trade cycles.
OEMs have notably cut back on production, but if 2025 trailer orders remain well below expectations, some OEMs may need to extend or deepen
production cuts into next year.

Dan Moyer, senior analyst, commercial vehicles, commented, “As we have discussed in the context of Class 8 truck orders, President-elect Trump’s
plan to impose immediate tariffs on imports from Mexico, Canada, and China will add to the challenges. Those tariffs would significantly raise costs
for fully assembled trailers imported from Mexico and Canada as well as for critical automotive parts sourced from these regions and China that
are essential to U.S.-based trailer production. Resulting supply chain disruptions and/or cost increases could mean higher trailer prices, altered
trade cycles and buyer demand patterns, and strains on fleet operator budgets. Slightly elevated trailer dealer inventories might temporarily meet
a short-term demand surge as buyers attempt to avoid higher costs, but the potential for increased costs for Class 8 tractors might prompt some
fleets to continue prioritizing purchasing power units over trailers in the near term.”

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