According to ACT Research’s (ACT) latest release of the North American Commercial Vehicle Outlook, current Class 8 build rates may suggest upside to the 2019 forecast. But large new inventories and deteriorating freight and rate conditions suggest erring on the side of caution remains the right call.
“Current Class 8 market activity is rapidly approaching the precipice, and everyone should be preparing for a rapid downward correction in production levels in the next handful of months,” said Kenny Vieth, ACT’s president and senior analyst. “Current data and anecdotes make a strong case that the call for a Q3’19 inflection point expectation remains intact.”
Regarding heavy vehicle demand, Vieth said, “at the heart of our cycle duration prediction, carrier profitability and production peaks always lag the freight cycle, so capacity building always accelerates relative to freight growth at exactly the wrong time.
“Excluding the pre-buy and housing bubble impacted 2004-2006 cycle, peak-of-cycle build rates have historically lasted around 5 quarters. For this Class 8 cycle, we date peak build rates to June 2018, so we are just now entering quarter five.”
Regarding ACT’s medium duty forecasts, Vieth said, “Retail sales are tracking the medium duty forecast very well, but the current situation, as it relates to build, suggests upward pressure on the forecast. Large new vehicle inventories and slowing in order intake balance this pressure, resulting in stasis for the medium duty forecast.”
ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and Chinese markets.
ACT’s 61st seminar is scheduled for August 12-14, 2019, and will feature a dealer panel, as well as discussions on near-term demand of North American commercial vehicle markets and the impacts of tomorrow’s technical challenges. A global forecasting workshop is also being planned in conjunction with this semi-annual event. Click here for seminar information.