Last week in December — time for a year in review. I saw one of the Smothers Brothers (Tom) died this week, which is sad, but it is not that kind of year in review I had in mind. More focused on the truck parts aftermarket.
When this year started, our economist stated all the signs are there for a recession in 2023 or we were recession eligible. Eleven months later, no recession but the signs are all there still for a recession in 2024 and maybe stronger. I believe most folks are happy we missed a recession in 2023. Can we hope for the same in 2024? Yes (there is always hope), but time will tell.
Inflation has decreased (the rate of increase). Employment numbers have overall been good, although we have seen a decrease in the number of people employed in truck transportation. This has been a leading indicator for the start of a recession. Employment for this sector reached a peak in January and shows no signs of a new peak soon.
Truck transportation prices tracked by the Bureau of Labor Statistics for both long distance trucking and local trucking have also declined since the beginning of the year. The leverage on pricing has moved back from fleet to shippers.
Fleet utilization from our quarterly DataPulse Report for the year has been good — but not at levels seen in 2022. Third quarter fleet utilization of 2023 came in at 84.9%, this was 86.2% in 2022.
On a positive note, for future aftermarket demand, retail sales came in stronger than expected in 2023 for those who forecast these numbers, although this is slowing as well and the forecast for next year is down compared to 2023.
Aftermarket sales for those component manufacturers in our monthly Aftermarket Index started the year up 6% (U.S.) compared to 2022 and as of October, they were still up but closer to 3%.
From our monthly DataPulse Plus Report, Parts shortages and price increases seem to have dissipated (not disappeared) over the year (January to October) for truck dealers, heavy-duty parts distributors and fleets. From the same report, we have seen parts sales decline year to date compared to 2022 (January to October) from over 8% for both channels to about 4% in October. Still positive, but when you include price almost flat.
In summary, most indices are positive but moving in the wrong direction.
Our most recent forecast for 2023 (which is over in a few days) is for the aftermarket to be up 3.9% over 2022 with 3.5 points of that being price impact. Our current forecast for 2024 is up 3.1% over 2023 with price being 2.0 points of that. A smaller number in total but more actual growth — 0.4 % vs 1.1%. We love numbers but that difference would be hard to recognize in the market.
Our next outlook on the parts aftermarket and finalization of what we believe happened in 2023 will be reviewed at the HDAD 2024 conference — Jan. 22, in Grapevine, Texas. Still time to sign up for this conference and HDAW (Heavy Duty Aftermarket Week) 2024 — also in Grapevine. This is an excellent way to kick off your new year – with insights and panel discussions.
You can go to our website www.mackayco.com, to register and get more information.