Rising orders are supporting the commercial vehicle industry, presenters at MEMA's Pulse webinar said Wednesday, but there are significant headwinds to watch for.
"It's a period of contrasts," said Andrej Divis, executive director of global heavy duty research at S&P Global Mobility.
Joe Zaciek, director of research and industry analysis at MEMA, said the organization's most recent supplier survey showed net optimism in the commercial vehicle industry. Around a third of commercial vehicle suppliers say they're significantly or somewhat more optimistic in the second quarter compared to 22% in light vehicle.
Opportunities suppliers see this year include automation and robotics, AI, and localization of products or processes. Among the threats the survey showed are changes in trade policy, weakness in the economy, and an external black swan event.
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Zaciek said labor availability is an emerging concern as truck orders pick up after last year's lower order tallies and subsequent factory layoffs. "It's definitely going to remain a challenge as the labor market remains tight annually," Zaciek said.
Divis dove into some of the reasons for the optimism in the industry and also some headwinds S&P sees coming. On the plus side are those orders as well as expected growth in the U.S. economy. However, consumer spending is starting to slow down and, with interest rates higher, residential and business fixed investment may be a challenge. Those rates, he said, aren't forecast to come down until 2027 at the earliest.
"We think the Fed is going to sit tight," Divis said.
Industrial production is highly correlated with truck demand, he said, and it's been bumpy in recent years.
"We expect about 1% expansion in real terms in industrial production (each year from 2025-2028)," he said. "It's not spectacular, it's not red hot, but it is supportive."
One thing that foiled the forecast, Divis said, was that the Strait of Hormuz remains closed. S&P does expect the situation with the strait to improve, but noted there would be downward pressure if it doesn't, not just with diesel prices, but also with chemicals, petroleum derivatives, fertilizers and more.
Even though truck orders are up, Divis said registrations aren't. That number has been slipping since the fourth quarter of 2025.
"We continue to expect a flat year, but there's going to have to be some recovery, some climb, to get out of this trough," he said. It's been particularly rough on Class 7 trucks, but the decline in registrations are pretty much across the board.
Registrations are still running above Class 8 production, though, and that means the industry is drawing on built up inventory. Last year, Divis said, manufacturers "hit the brakes real hard," but production is now starting to come back up.
"That's one sign that things may be set to turn," he said.
Another sign is that retail sales are leading registrations. Divis said registrations will eventually climb to meet retail sales, or they have done historically, and there's still a chance some fleets may prebuy before the 2027 emissions regulations take effect.
Divis said they're also forecasting growth in both rates and truck tonnage with some exceptions. Rates should come down whenever the conflict in the Middle East cools and fuel surchages can roll off and construction and mining look to be weak in 2027.
"For anyone hauling anything else, it should be a pretty good year," he said.
Prices are also moderating, S&P said, without the expected bump in cost from tariffs. A 3-8% increase from early 2025 hasn't happened yet, and increases have been below 2%.
"Fundamentally," he said, "that's a good news story for the buyers of trucks, but what's behind that has been challenging for the industry." That includes compressing margins on truck sales to eat some of the costs.
Divis said the next forecast will come out in August and he hopes then to see some answers on the reopening of the Strait of Hormuz, interest rates and consumer confidence. He also said any news on the resolution of the U.S.-Mexico-Canada Agreement on North American trade will be something to watch.
