June is here, five months completed in the not-so-new year. Time to check in on what we have seen so far, measured, and word on the street in regard to the heavy-duty aftermarket in the U.S.
Our forecast for the Class 6-8 parts (including trailers) aftermarket in 2023 versus 2022 is for the market to be up 4%. Not the double-digit growth we have seen in the last two years, but it is impacted, like the last two years, by price. The 4% increase is primarily based on 3.5% anticipated price increases. Price is still a factor, as supply chain issues, while not as bad as 2022, are still problematic.
At the start of the year, we anticipated the real change year-over-year without price to be 0.5%. This is, in part, based on our economist’s belief that the Federal Reserve seems focused on pushing the economy into a recession. That may not actually be its primary focus (it isn’t — it’s getting inflation knocked down), but that is anticipated to be a result on the way as increasing interest rates cause more pain to consumers and companies.
[RELATED: What's up for 2023? Part 1]
At my age, interest rates (fed funds rate) in the 5% range do not seem crazy, but it is all relative. When you spend as many years as we have near zero for federal funds rates, people get used to it. Some businesses plan on low-level rates as part of their business plans and justifications for property and capital goods purchases and, when it comes time to refinance or purchase again, that’s where the pain comes in. Fewer capital goods purchases, less new home building is to be expected and we have seen it decrease.
