In its latest North American Commercial Vehicle OUTLOOK,ACT Research reported that it shifted forecasts last month to include an inbound recession, while this month’s forecast changes were characterized by smaller adjustments, both higher and lower, as the shape of the downturn forecasts were fine-tuned.
“We are raising our 2022 forecast, reflecting better-than-expected production in June and some easing of supply conditions, although we believe industry production will continue to be capacity constrained. Our now higher forecast remains incrementally below the OEMs’ aggregate industry build plan.” Kenny Vieth, president and senior analyst at ACT Research, said. “More persistent rate tightening, beyond the 100bps of additional tightening we expect through the balance of 2022, represents a downside risk to our current forecast.
“The combination of falling freight rates, higher carrier operating costs, rising interest rates and falling used equipment valuations represent increasing risks to vehicle demand as we move into 2023. However, while we are marking down our forecast, 2023 is still projected to be a very good year, just not as good as we were expecting, as tailwinds are blowing less hard amid rising headwinds.
“We continue to see at least three factors mitigating a more severe downturn. Carrier profitability is strong, with profits at all-time record levels in 2021, and full-year TL fleet profits are pegged at second-best ever levels in 2022. Vehicle demand remains healthy, if moderating from here, with pent-up demand expected to support demand into 2023. Finally, some prebuy activity is anticipated prior to the implementation of CARB’s Clean Truck mandate, helping to support activity into year-end.”
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