According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, the continued spread of COVID-19 over the past month has resulted in freefalling GDP assumptions, and by extension freight volumes, carrier profits and expectations for commercial vehicle demand.
The N.A. CV OUTLOOK is a robust report that forecasts the future of the industry, looking at the next 1-5 years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides a complete overview of the North American markets, as well as takes a deep dive into relevant, current market activity to highlight orders, production, and backlogs, shedding light on the forecast. Information included in this report covers forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.
“As we’ve worked to get our heads around the deterioration in economic conditions, we released two preliminary forecast updates between the March and April OUTLOOK reports,” said Kenny Vieth, ACT’s President and Senior Analyst. He elaborated, “Our expectations just one month ago for US and Canadian economic activity were modestly positive, with growth marked down to around 1%; that has changed significantly now, as we’ve seen and continue to see state shutdowns essentially covering the US, and many of the ‘to-mid-April’ shutdowns now being extended to the end of April and beyond.” Vieth added, “With shutdown orders in key supplier states, as well as across Mexico, the supply chain is so fragmented at this juncture that it would be difficult for the OEMs to assemble vehicles beyond the parts that were in the pipeline when the industry stopped production.”
He continued, “Our second change is the assumption that inventories will correct hard and faster. Given the sea-change in activity, dealers will be working diligently to get their inventories as lean as possible as soon as possible in 2020, as this is not a time for them to have oversized floorplans.”
Regarding NA commercial vehicle demand, Vieth commented, “While we reserve the details of our forecasts for ACT subscribers, I can tell you that the underlying fundamentals in the medium duty market have come under direct attack from COVID-19, which is aimed directly at the consumer portion of the economy. And while the forecasts for Class 8 and trailers have been set meaningfully lower, the trajectory of the cycle generally is unchanged.”
ACT’s 63rd seminar is scheduled for August 11-13, 2020, and will feature dealer, alternative power, and economic panels, as well as discussions on near-term demand of North American commercial vehicle markets and the pending impact of alternative power on the market in the near future.