ACT Research updated its 2023 and 2024 Class 8 production forecast this week, announcing slightly higher retail sales and production volumes for both years compared to last month's estimates.
ACT Research had previously forecasted a drop-off in fourth quarter sales and build activity. The company states that no longer looks likely due to a continuously improving macroeconomic environment. ACT also has raised its GDP, medium-duty, and trailer build forecasts.
"The upward forecast revisions reflect our view that macroeconomic positives will increasingly outweigh negatives as the calendar advances into 2024," says Kenny Vieth, ACT’s President and Senior Analyst. "Support from consumer durables, and perhaps even capital equipment spending, will be a plus. These are sectors that usually have steep declines in a traditional recession, but have held well thus far in 2023, and we expect that momentum to continue into 2024. Next year inventory accumulation should inflect to a freight tailwind, from the current destocking headwind."
Vieth goes on to say weaker than normal orders in 2023 should lead to lower, if historically shallow, production declines in 2024.
"Our now shallower decline in 2024 reflects a higher first quarter production starting rate, slightly higher economic growth, the notion that some customers may choose to replace equipment more liberally than they might otherwise in advance of the EPA’s expensive 2027 emissions mandate, which is likely to see vehicle demand outstrip the industry’s ability to supply, and for the same reasons, a willingness by dealers to carry more inventory through the 2024’s period of slower activity," he says.
