Class 8 Regression to the Mean Coming in 2020

Class 8 market is moving from peak activity in sales and build in 2019 to a substantial correction in 2020

According to ACT Research’s recently released Transportation Digest, the Class 8 market is moving from peak activity in sales and build in 2019 to a substantial correction in 2020. Activity for the total MD market was mixed in September, with weakness in sequential comparisons, but expansion still evident in longer-term performance.

“With the trade war as a major caveat to forecast expectations, our underlying view is that the economy will experience slower growth but not recession in 2020, setting the heavy-duty truck market up for a modest rebound in 2021 followed by growth into 2023. However, the far years of this forecast are influenced by the prospect of new emission controls in 2024, triggering a 2023 prebuy, followed by a 2024 payback,” said Kenny Vieth, ACT’s President and Senior Analyst. He continued, “This regression-to-the-mean for 2020, after near-record production in 2019, has been our forecast since early 2018, so our subscribers have had nearly two years of yellow-light signals on the upcoming correction.”

Regarding the medium duty market, Vieth commented, “Customers clearly remain concerned about the near-term future, as demonstrated by the continuing pullback in order activity that has led to narrower backlogs. Despite the weaker looking front-end of the demand cycle and very high inventories, build and sales continue to perform at near-record levels.”

Category: Equipment, Featured, General Update, News