Is uncertainty the new normal? TPS survey responders are acclimating to market shifts

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Updated May 9, 2023
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Truck dealers and their aftermarket counterparts are getting used to an uncertain economy. At least, that’s the vibe from responders of the TPS MarketPulse quarterly survey last month.

Introduced last year, the TPS MarketPulse survey looks to uncover a directional assessment of market conditions by polling a relatively stable panel of respondents each quarter. Within the aftermarket, last year that direction was downward.

Respondents to our survey predicted after each quarter in 2022 that the following three-month period would see even weaker business conditions, often pointing to several well-known factors (economic uncertainty, price inflation, supply chain frustrations and natural market correction) as reasons for the increasing doubt. In April 2022, aftermarket responders predicted Q2 to rank as an 8.05 on a scale 1-to-10 scale where 1 represents their worst quarter ever and 10 their best. Predictions fell from there, bottoming out at a 6.67 prediction for Q1 of 2023 after closing 2022 books.

[RELATED: Class 8 orders plummeted in April]

That negative trajectory has finally stopped. Aftermarket respondents to our April survey after Q1 are now predicting a 7.06 for the current quarter. While that’s hardly a record-setting number and below Q1’s actual performance (7.53), it indicates aftermarket sentiment is normalizing and concerns from within and outside the trucking industry are no longer driving extreme pessimism about the segment’s future growth potential.

Dealer sentiment also appears to be normalizing. Dealer confidence slipped noticeably for the first time at the beginning of this year when responders predicted the first quarter to perform at a 7.38. The segment had previously predicted performance levels of 7.67 to 7.73 for the three prior quarters. In anticipating a 7.31 for Q2, dealers did trend downward, but only slightly and showed more confidence in other areas of our survey. Most notably around employment and growth potential.

Nearly 80% of dealer responders to our April survey say they expect to expand their workforce in the next six months. That was up almost 15% compared to our prior survey. The number of dealers considering adding new facilities was up 16% in the same time period, and every dealer contemplating an expansion noted they would like to add a new facility.

It is unlikely dealers would be investing in greenfielding new locations if they felt a market collapse is imminent. New truck sales success is likely a reason for their confidence. New equipment sales represent the strongest busness segment for 77% of truck dealer responders and the weakest segment for only 15%. On the latter point, used equipment sales (54%) is the clear thorn in the side of dealer operations.

If there’s a major concern in the dealer sector, it’s outside forces, particularly regulation.

In April’s survey, 38% of dealer responders rank “regulatory influence on the trucking industry” as their top business concern, equal with “current economic/business conditions.” This was the first time regulatory forces were noted a top concern in our survey.

[RELATED: Suppliers share how they evaluate, onboard new distribution points]

Overall, 69% of dealer responders ranked regulatory influence as a top-five concern. That was slightly below the 78% of dealers who ranked it as a top five concern in Q4, but well above the percentages garnered in prior quarters last year. EPA’s proposed GHG regulations for 2027 and California’s plan to ban diesel trucks as of 2036 are likely reasons for the growing regulatory concern.

Aftermarket concerns were more varied. Employee recruiting and retention remains a major challenge, as do business conditions and inflation fears. Local competition and supplier partnerships were referenced as well.

TPS will conduct its second quarter MarketPulse survey in July and publish a brief synopsis of the data after it concludes.

Want to read more insights from our fourth quarter survey? Or participate in future surveys? We’d love to hear from you.

All truck and trailer dealers and independent aftermarket businesses are encouraged to participate in the TPS MarketPulse survey, and only businesses who choose to participate will receive complete survey results each quarter. For more information, and to register, please email [email protected]

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