After pushing its 2024 North America Class 8 production forecast up the previous two months, the forecast is left essentially unchanged in April, as published in the latest release of the North American Commercial Vehicle OUTLOOK. While 2024 retail expectations were unchanged, ACT’s Class 8 production forecast ticked up on a massive production beat relative to expectations in February.
“With the preliminary look at March orders indicating that demand may finally be cooling from non-fundamental levels, and recognizing that Q2 through mid-Q3 is the historically weakest period of the year for orders, we are more comfortable with the 2024 forecast from here,” according to Kenny Vieth, ACT Research’s President and Senior Analyst.
“With spot rates still at sharp operating loss levels into early April, and carrier profitability halved in the past two years, we continue to pose the question, who’s buying Class 8 tractors at the bottom of the cycle? Certainly, it is not embattled for-hire TL fleets. Our answer over the past year has been private fleets, who have reclaimed freight from load boards and taken market share from for-hire markets.”
He added, “Our expectation that the sharp contraction in for-hire carrier profits would force the market to rebalance in 2024 has given way to private fleets heeding OEMs’ cautions about 2027 costs three years ahead of the EPA’s Clean Truck mandate. Current estimates are putting the day one cost of the mandate, inclusive of taxes, at around $30k per Class 8 unit. Most of that added cost is tied to the warranty and useful life extensions. With around 40 percent of Class 8 buyers purchasing warranty extensions due to high-mileage operations (for-hire TL), not all carriers will feel the regulation’s bite equally.”
Vieth concluded, “Given the anticipated pre-EPA’27 mandate demand swell into 2026, supply chain integrity is an especially critical CV activity in 2027. Private fleet capacity positioning is just one part of the ‘this purchasing cycle is different’ story along with ongoing domestic vocational and Mexico market strength.”