ACT Research digests painting less than rosy picture in CV market

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Since early 2018, ACT Research Vice President Steve Tam said the company’s forecasts have called for the up-cycle in the Class 8 market to run out of steam around the third quarter of 2019. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — Two ACT Research digests are painting a less than rosy forecast for two segments of the commercial vehicle market.

The Commercial Vehicle Dealer Digest said that expectations for the Class 8 and trailer markets anticipate a pullback in build rates, as market conditions continue to deteriorate. While less cliff-like, medium duty market indicators continue to support a modest correction into 2020.

ACT’s Transportation Digest noted that the Class 8 market is moving from 2019 peak activity in sales and build into a substantial correction in 2020 and activity for the total medium duty market was jumbled in August, confirming the dichotomy of the various facets of the industry.

The Commercial Vehicle Dealer Digest, which combines ACT’s proprietary data analysis from a wide variety of industry sources, paints a comprehensive picture of trends impacting transportation and commercial vehicle markets. The monthly report includes a relevant but high-level forecast summary, complete with transportation insights for use by commercial vehicle dealer executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the total U.S. trailer market, used truck sales information, and a review of the U.S. macro economy.

“Since early 2018, ACT’s forecasts have called for the up-cycle in the Class 8 market to run out of steam around the third quarter of 2019,” said ACT Vice President Steve Tam. “Over the past couple of quarters, we have been beating the drum loudly so that our customers could be as well positioned as possible for when the downturn in industry activity inevitably occurred. Starting around six weeks ago, we began to see announcements of staffing reductions and plant shutdowns from OEMs, as well as from major tier-one suppliers. Anecdotes suggest the lower tiers on the supply chain have experienced production volumes cuts since early in September.”

Tam said the manufacturing sector is a critical source of freight generation.

“From raw materials to components to sub-assemblies and finally to the creation of complex machinery, there is much truck freight involved in the movement of small pieces to build large things,” he said. “The forward-looking Manufacturers’ new orders, nondefense capital goods (ex-aircraft), a look at demand for freight-intensive durable goods, shows durable goods orders have stagnated in 2019 and have been negative year-over-year for the past two months. The lack of traction on the front side does not speak well for a near-term recovery in industrial activity.”

The Commercial Vehicle Dealer Digest, which combines ACT’s proprietary data analysis from a wide variety of industry sources, paints a comprehensive picture of trends impacting transportation and commercial vehicle markets. This monthly report is designed as a quick look into transportation insights for use by fleet and trucking executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the total US trailer market, used truck sales information, and a review of the U.S. macro economy.

“With a major trade caveat, our underlying view is that the economy will have slower growth but not recession, so the heavy duty truck market rebounds and enjoys three years of growth from 2021 to 2023,” said Tim Denover, ACT vice president and senior analyst. “However, the far years of this forecast are influenced by the prospect of stringent emission controls in 2024, triggering a 2023 prebuy, followed by a 2024 payback. “This regression-to-the-mean for 2020, after near-record production in 2019, has been our forecast since early 2018, so shouldn’t surprise our subscribers.”

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets.

For more information, visit www.actresearch.net.

 

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