Class 8 forecasts, as published in the latest release of the ACT Research North American Commercial Vehicle Outlook, are for slight year-over-year increases in retail sales and production volumes in 2023, reflecting stronger momentum into Q3. ACT Research continues to forecast deteriorating sales and build in Q4.
“The industry is closing in on this cycle’s downward inflection point as strong vehicle production and sales continue in the face of weak freight creation and the exhaustion of pent-up demand in 2023,” according to Kenny Vieth, president and senior analyst, ACT Research. “Collectively, lower freight rates, shrinking carrier profits, higher equipment and borrowing costs, and improved equipment availability put downward pressure on demand overall.
“Even though we are closing on this cycle’s tipping point for commercial vehicle demand, we are encouraged by the economy’s resilience as evidence that the economy’s chances of dodging a recession accumulate. While the expectation is for tepid growth in the near term, it is an improvement from torpid. The economy’s ongoing above-expectations performance allows us to modify our US forecast, taking an anticipated recession out of our projections for the economy.”
Vieth stated that looking ahead to the end of 2023, there are conflicting factors influencing the situation. On one side, there are various factors contributing to negative pressures, such as slow economic growth, decreased freight volumes, increased pressure on carrier profits, and declining pent-up demand. However, these negatives are currently balanced out by the strong financial positions of carriers and the support of pent-up demand at the beginning of 2023, along with the anticipated prebuying in California due to CARB regulations until the end of the year. His findings suggest that as the influence of pent-up demand diminishes and prebuying is replaced by payback in 2024, the expected decline in heavy vehicle demand may occur a quarter later than initially predicted, but it is unlikely to be delayed by two quarters.