Class 8 forecasts, as published in the latest release of the North American Commercial Vehicle Outlook, call for higher 2023 and 2024 retail sales and production volumes compared to last month’s report. The previously forecasted drop-off in Q4 sales and build activity no longer looks likely due to a continuously improving macroeconomic environment. Additionally, ACT also raises its GDP, medium duty, and trailer build forecasts.
“The upward forecast revisions reflect our view that macroeconomic positives will increasingly outweigh negatives as the calendar advances into 2024,” according to Kenny Vieth, president and senior analyst, ACT Research. “Support from consumer durables, and perhaps even capital equipment spending, will be a plus. These are sectors that usually have steep declines in a traditional recession, but have held well thus far in 2023, and we expect that momentum to continue into 2024. Next year inventory accumulation should inflect to a freight tailwind, from the current destocking headwind.”
Vieth’s analysis suggests that reduced orders in 2023 will likely result in smaller production declines in 2024 compared to historical trends. The milder decline in 2024 can be attributed to several factors, including a higher production rate in Q1, slightly improved economic growth, the expectation that some customers may opt to replace their equipment more generously ahead of the costly EPA’s 2027 emissions mandate, according to ACT Research findings. This mandate is anticipated to create a surge in vehicle demand, potentially exceeding the industry’s supply capacity. Consequently, dealers are also expected to hold more inventory during the slower phase of 2024 to meet the heightened demand.
