Business conditions held firm in the second quarter but industry sentiment is starting to trend downward as longstanding concerns about a recession in the second half of the year are beginning to be vocalized, Trucks, Parts, Service uncovered in its MarketPulse quarterly survey last month.
Dealers and distributors alike mostly responded with stable evaluations of second quarter business conditions in our July survey, but when asked to predict the months ahead, optimism receded. Expectations for Q3 and into Q4 were down in both segments.
TPS survey responders are not anticipating a deep recession — no responders expect to reduce their workforce and more than half of all responders still want to expand their operations — but when predicting Q3 against the first half of the year, or comparing it to business results from last year, it is clear the industry is concerned.
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On a 1-to-10 scale, where 1 is the worst quarter ever and 10 is the best quarter ever, dealers anticipate Q3 to be a 6.94 on average. In the aftermarket, predictions are even lower at 6.40.
Dealers evaluated business conditions as a 7.18 in Q2, aftermarket responders were slightly higher at 7.30. Both totals were down slightly from Q1 but not far from Q2 projections provided in our April survey. The aftermarket actually exceeded expectations in Q2, as April’s prediction for the second three months of the year was 7.06 among responders.
Economic concerns seem to be driving most pessimism for the months ahead.
