Downside Risks Dampening Expectations for Heavy-Duty CV Market

ACT Research reports Trucking industry profits tend to lag the freight cycle, so are likely to peak around Q3’22

According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, while ACT Research still likes the footing of the US economy, with consumers sitting on considerable savings, debt-service historically low, and the job market flush with opportunity, downside risks are dampening near-term commercial vehicle expectations.

According to Kenny Vieth, ACT’s President and Senior Analyst, “Given the corrosive effects of inflation and the Fed’s response, uncertainty as to the depth and duration of events in Ukraine, and the impact of Chinese COVID lockdowns on global supply chains, the economy is walking a fine line in 2022.” He continued, “Trucking industry profits tend to lag the freight cycle, so are likely to peak around Q3’22. As profits lag relative to the cycle, so too does production for heavy-duty trucks and trailers.”

Vieth concluded, “The headline takeaway is that we have lowered our 2023 Class 8 build forecast. Our tempered view reflects: 1) a longer tail to supply-chain headwinds than we had previously envisioned, particularly for semiconductors, and 2) lower in-house GDP and Freight Composite estimates.”

Vieth noted, “Despite the lowered build forecast in the most recent issue of our North American CV OUTLOOK, it is important to remember that we continue to expect higher build, just not as high as previously thought. Carrier profitability is robust, and should there be a recession, we anticipate that it will be shallow and short-lived, and pent-up demand for medium- and heavy-duty vehicles still remains.”

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