Recent analysis by Commercial Motor Vehicle Consulting (CMVC) into the Class 8 new truck market indicates truck sales are likely to trend down in the second half of the year and could do so sharply if freight demand does not change.
CMVC states U.S. Class 8 fleet capacity utilization has been trending downward since June 2022 as a result of an increase in Class 8 truck sales and a sluggish freight environment. The company says truck makers' inability to meet fleets’ truck investment spending plans in last year due to supply chain issues caused fleet capacity utilization initially to increase.
CMVC says Class 8 truck sales will remain strong in the short term as fleets satisfy pent-up truck demand related to the aforementioned inability by OEMs to satisfy truck orders in 2022 but will begin to trend downward as the year progresses.
"CMVC estimates pent-up truck demand will be satisfied by the end of the second quarter or early in the third quarter, so fleets must adjust truck investment spending plans during the second half of 2023 or fleet capacity utilization will trend downward to low levels, or freight growth must substantially strengthen to support strong truck sales during the second half of the year," the company says.
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CMVC also states economic growth will likely remain sluggish at best during the second half of the year as the economy continues to adjust to higher interest rates. With the likelihood of a soft freight environment, CMVC believes fleets will adjust truck investment spending plans.
CMVC's analysis is more bearish than FTR and ACT Research offered in releasing their March 2023 preliminary Class 8 order estimates this week.
“The current rate of Class 8 truck sales is unsustainable for an extended period if the freight environment remains soft, as fleet capacity is expanding at faster growth rates than freight volumes resulting in a downward trend in fleet capacity utilization," says CMVC President Chris Brady. "If fleet capacity utilization trends downward to low levels then fleets will be compelled to make swift and large adjustments in truck investment spending plans resulting in large cancellations in Class 8 truck orders."
Brady adds, "Without an acceleration in freight growth, fleets either make orderly adjustment in truck investment spending plans as fleet capacity utilization trends downward or swift and large adjustments in truck investment spending plans as fleet capacity utilization reaches low levels."