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ACT’s US Tractor Dashboard, a metric that provides forward-looking market insight by encompassing variables that take both supply and demand into account, underscores that rather than getting better, the US Class 8 tractor outlook has deteriorated further in Q2, as published in the latest release of the North American commercial vehicle forecast.
![ACT Research Tractor Dashboard](https://de20kuyh79gr1.cloudfront.net/2024-Press-Releases/July/May-Tractor-Dashboard.png)
“Following a -7 reading in March, ACT’s 15 metric Dashboard has posted back-to-back -11 readings, with negatives interspersed through the macro, freight, and industry metrics that comprise the aggregate,” according to Kenny Vieth, ACT’s President and Senior Analyst.
“Were these ‘normal’ times, the implied stepdown in support would be signaling increased tractor market weakness into next year. The wildcard as we look to 2025 is carriers’ appetite to add equipment ahead of the EPA’s expensive 2027 clean truck mandate,” he added. “Typically, the market’s individual components tend to be more closely sync’d and cycle together into a market downturn. With North America’s economies all growing, and recognizing tractor market risk to the forecast, there are certainly positive factors at play as we look to 2025—robust US and Canadian vocational markets and the best Mexican market in a decade are certainly helping to offset the impending trough in tractor demand that is expected to last into mid-2025.”
There are still several pockets of strength in the Class 8 market, but:
for-hire carrier profits are at levels not seen since 2010;
- deep into the bottom of the cycle, there has been no tractor market capacity rationalization to date, only capacity additions;
- excessive capacity expansion has left freight rates at recessionary levels, continuing to prolong the downturn; and,
while still expanding, the pace of the economy’s recovery is running at about half the 4%-plus GDP rate of 2H’23.
NA CV Forecast Report Overview
The NA CV forecast reports on the trucking industry forecast, providing a status of commercial vehicle demand, tactical and strategic market analysis and forecasts ranging out five years. The report’s objective is to give OEMs, suppliers, investors, and other interested market participants the information they need to make informed decisions in what is traditionally a deeply cyclical market. The report provides a complete overview of the North American markets, touching on relevant demand drivers starting with forward-looking activity metrics, orders and backlogs. Information included in this report covers build and retail sales forecasts and current market conditions for medium- and heavy-duty trucks/tractors, and trailers, North American macroeconomics by country, freight and carrier market performance, used equipment valuation trends, and regulatory environment analysis and impacts.
ACT Research Overview
ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.
Additional Resources
Except for Class 8, trailer and Classes 4-7 forecasts were largely unchanged, as published in the latest release of the North American commercial vehicle forecast.
“Not only did April build not slow in the face of tough freight fundamentals, falling backlogs, and near-record inventories, production of Class 8 vehicles came in well ahead of expectations. Still strong production and an upwards adjustment to our inventory-carrying assumptions, boosts 2024 output while reducing 2025,” according to Kenny Vieth, ACT’s President and Senior Analyst.
“The uptick in 2024 expectations into worsening conditions is a coin toss: we may miss the timing, but shallower sooner or deeper later appear to the options,” he added. “Class 8 overcapacity persisting longer in 2024 and weighing more heavily on carrier profitability is not just a risk to Class 8, but also to the trailer forecast. If current market demand reflects EPA’27 prebuying, that prebuying comes at the expense of better freight rates sooner. While over-the-road carriers are under considerable pressure, we would be remiss not to note that vocational truck markets are in better shape than tractor markets, though even here, inventories are getting extended.”
There are still several pockets of strength in the Class 8 market, but:
- for-hire carrier profits are at levels not seen since 2010;
- deep into the bottom of the cycle, there has been no capacity rationalization to date, only additions;
- capacity expansion has left freight rates at recessionary levels, continuing to prolong the downturn; and,
- while still expanding, the pace of the economy’s recovery is running at about half the 4%-plus GDP rate of 2H’23.
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