COVID-19 CHANGING CV MARKET FORECASTING ASSUMPTIONS

The global spread of the COVID-19 required a foundational reassessment of near-term economic expectations

In the release of its Commercial Vehicle Dealer Digest, ACT Research reported that, starting in the second half of February, COVID-19 went from a China containment story to one of spiraling pandemic.

 “There are times when the world that you thought you understood gets tipped on its head in just a matter of days, and these are those days,” said Kenny Vieth, ACT’s President and Senior Analyst. He continued, “The global spread of the COVID-19 required a foundational reassessment of near-term economic expectations, and by extension North American commercial vehicle demand.”

Vieth continued, “Domestically, there has been some silly discussion regarding the severity of the outbreak, which we believe miss the critical economic point: Nearly two months after shutting down for the Spring Festival holiday, China is only now starting to return to work. And, while they weren’t working, the Chinese weren’t spending either.” He elaborated, “As the planet’s largest consumer of commodities, China’s downturn is hitting commodity prices across the board. On top of the demand-side weakness that continues to unfold, the front-and-center impact from a freight perspective at present is on the supply side: Domestic port and rail volumes have just begun to reflect the drop in Chinese output.” Asked about any “silver linings,” Vieth replied, “We anticipate considerable pent-up demand for inventory restocking and sales of parts and unfinished goods that are now in a drying-up phase.”

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