Freight market unlikely to change fast enough to boost 2024 truck sales

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Stable but ordinary sales in the first months of 2024 have created little positive momentum in the supplier channel, reported experts during the MEMA Pulse webinar with S&P Global Mobility on Wednesday.

In summarizing MEMA’s most recent Pulse survey of member companies, Joe Zaciek, director, research and industry analysis, says supplier consensus indicates 2024 has been uninspiring to date. Few suppliers report sales being down precipitously from 2023 results or 2024 projections, but extremely strong sales are equally sparse. Additionally, Zaciek says MEMA's regular survey indicates suppliers continue to deal with supplier performance challenges and rising prices that are limiting profitability potential.

Suppliers have broader economic concerns too.

Zaciek says general pessimism about the U.S. economy was the highest rated concern in MEMA’s survey, and individual responses to the survey ran the gamut from malaise to recessionary fears. Behind the economy, government intervention is a major fear — due to changes in trade policy and new regulations.

[RELATED: Softening Class 8 market weakened truck sales in first quarter]

The good news, Zaciek says, is most supplier responders don’t anticipate the market to remain down for too long. Many responders to MEMA’s survey state they are attempting to take advantage of the current conditions to “invest in capacity and efficiencies,” he says, while others are focused on strengthening their supply chains after the challenges of recent years.

S&P Global’s Mark Hazel and Andrej Divis followed Zaciek and said their company’s data tracks with the analysis of MEMA suppliers.

S&P is projecting U.S. GDP to be up around 1.7% this year, better than a recession but weaker than 2022 and 2023. The company also estimates commercial vehicle registrations to be flat or up slightly over last year as the industry continues to renormalize in the aftermath of the pandemic.

Hazel says overall commercial vehicle registrants are up 11% from 2019 to 2023, but the market feels weaker for many suppliers because the Class 8 market is still tracking slightly below 2019 numbers. Hazel says that will turn around in 2025 if not this year.

Other classes are growing much faster. Divis says the Class 3 segment, driven by investment from last-mile carriers like UPS and FedEx and online retailers like Amazon and Walmart, has grown dramatically in the last four years, up 69%. The Class 6 market is also up 7%, which Divis attributes to lease and rental carriers finally getting access to equipment they ordered and have been waiting for in recent years.

[RELATED: FTR states freight market may be about to turn]

How the rest of the year turns out will mostly be driven by the freight market, Divis says, which recently has shown signs of breaking out of its doldrums. He says S&P’s flat forecast for 2024 is rooted in the belief that the market will not turnaround quickly or dramatically.

“We don’t see that snapping back fast enough to make this year anything more than flat or slightly up,” he says.

Yet no matter how the rest of 2024 progresses, S&P’s duo says sales and registrations will turn dramatically upward in 2025 once fleets begin ordering ahead of EPA 2027 regulations.

“We see more steady increases in 2025 and even more so in 2026 ahead of the emission changes,” Divis says. “We’re going to have a pre-buy.”

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