Commercial Vehicle Market Indicators

Commercial vehicles are commonly classified by gross vehicle weight rating. These classes help the industry distinguish between light-duty, medium-duty, and heavy-duty vehicles, as well as the different applications those vehicles serve.

ACT uses vehicle class definitions to analyze demand, production, retail sales, fleet behavior, and market-cycle movement across commercial vehicle segments.

Commercial vehicle class definitions

LIGHT DUTY: A light-duty CV is classified as GVW Class 3 (10,001 – 14,000 lbs.) and Class 4 (14,001 – 16,000 lbs.). Class 3 and Class 4 commercial vehicles, generally including lighter trucks, buses, vans, and RV applications.

LIGHT MEDIUM: A light medium-duty CV is classified as GVW Class 5 (16,001 – 19,500 lbs.). Class 5 vehicles include trucks, shuttle buses, RVs, and other applications that often vary by body type or upfit. Light medium-duty vehicles take on a variety of job types dependent on the up-fit (or body type) applied to the chassis.

*ACT Research does not use light medium as a classification in data or reports (See graphic below for a breakdown of how ACT Research classifies the truck market.)

MEDIUM DUTY (MD): GVW Classes 6-7. An MD CV is classified as GVW Class 6 (19,501 – 26,000 lbs.) and Class 7 (26,001 – 33,000 lbs.). Classes 6–7 commercial vehicles include trucks, buses, vocational vehicles, and other applications used in local and regional operations. *The term midrange is also used in the CV industry and classifies Classes 3-7 trucks. This refers to the typical operating range of vehicles, which is primarily of a local or regional nature.

HEAVY DUTY (HD) or CLASS 8: Defined as a straight truck or tractor over 33,001 pounds and is often referred to as a semi-truck or big rig truck. Class 8 tractors are especially important to freight-market analysis because they represent the equipment base most directly tied to truckload capacity.

STRAIGHT TRUCK or TRACTOR: A straight truck or tractor is a CV with a cab and body consisting of one unit—all axles are attached to a single frame.

Straight Truck vs. Tractor
A straight truck has the cab and body on a single frame. A tractor is designed to pull a trailer and is central to many freight-hauling applications.

OEMs and suppliers in the commercial vehicle market

Commercial vehicle OEMs are the original equipment manufacturers that produce trucks, tractors, buses, and other commercial vehicles. These manufacturers rely on supplier networks for the parts, systems, components, and materials needed to build vehicles.

Supplier tiers are often described this way:

• Tier 1 suppliers: Sell directly to OEMs.
• Tier 2 suppliers: Provide parts, systems, or components that support Tier 1 suppliers or OEM production.
• Tier 3 suppliers: Provide raw or near-raw materials used throughout the manufacturing supply chain.

Understanding OEM and supplier activity helps customers evaluate production timing, component demand, supply chain exposure, and market-cycle movement.

• Ford Motor Company

• Daimler Trucks North America LLC (includes Freightliner, Western Star, and Sterling Trucks),

• Navistar International Transportation Corporation,

• Isuzu Commercial Truck of America, Inc.,

• PACCAR (includes Kenworth Truck Co. and Peterbilt Motors Inc.),

• Mac Trucks Inc.,

• and Volvo Trucks North America, Inc.

Core commercial vehicle market indicators

Backlog (BL): The backlog is the number of vehicles that have been ordered but have not yet been built. Backlog is calculable: Past backlog + current net orders – current build = new backlog.

Build (BU): Build, or production, pertains to the number of vehicles produced for a given market, NOT the country in which the actual production takes place. When a unit leaves the assembly line it is counted in the build data.

New Orders: New orders are the total number of orders received by the industry each month. Also referred to as gross orders.

Cancellations: Cancellations are units that have been ordered previously and are then canceled. Order and cancellation cannot occur in the same month.

Net Orders: New Orders – Cancellations = Net Orders.

Inventory: Inventory is the number of units that have been built, but for which no factory shipment has yet taken place. Inventory is a calculable number, rather than an additive, number: Past inventory + current build – current factory shipments = current inventory.

Retail Sales: Retail sales are the number of units sold to end users.

Factory Shipments vs. Retail Sales: For the trucking industry, ACT tracks monthly and annual retail sales data. These numbers differ from factory shipments (see Trailer Market Indicators below). Total OEM build is not equal to or the same as factory shipments. A factory shipment takes place when the truck leaves the factory. A retail sale takes place when the truck is actually sold. The timing of a vehicle’s build, its subsequent shipment from the producing factory, and the final retail sales are three different events that do not occur on the same day.

What drives truck demand?

Commercial vehicle demand is shaped by three major forces:

1. Freight that needs to be hauled
   Economic activity creates freight demand. When freight demand grows faster than productivity, the market may need more equipment capacity.
2. Carrier profitability
   Fleets are more likely to replace or expand equipment when they are profitable and confident in future demand.
3. Used asset values
   Used truck values affect trade timing, replacement economics, collateral exposure, and fleet willingness to purchase new equipment.

Together, these forces help ACT evaluate whether the market is likely to support replacement demand, growth demand, or weaker equipment demand.

Freight demand and economic activity

Not all economic activity creates the same amount of freight. Durable goods consumption, manufacturing, residential investment, business investment, imports, exports, and inventory activity tend to be more freight-intensive than many service-based sectors.

That is why ACT uses freight-weighted economic analysis, including the ACT Freight Composite Index, to evaluate the parts of the economy most closely tied to freight movement and Class 8 equipment demand.

This approach helps customers understand when economic growth is likely to translate into freight demand and when headline GDP may not tell the full freight story.

It’s not just freight creation but also changes in utilization and density that impact work to be done. Because shippers expect transportation inflation to continue rising (new vehicle prices, driver wages) through the forecast period, the sense of urgency toward fleet productivity will remain high.

Productivity: how efficiently the market uses equipment

Freight demand does not translate directly into equipment demand. Productivity also matters.

If fleets and shippers can move more freight with the same equipment base, the market may need fewer new tractors. If productivity weakens, the market may need more equipment to move the same amount of freight.

ACT evaluates productivity through factors such as:

• Density: How packaging, warehousing, routing, and shipment practices affect freight volume and weight.
• Utilization: How effectively fleets use available tractors, trailers, drivers, and network capacity.
• Modal shift: How freight movement between truckload, rail, intermodal, and other modes changes demand for Class 8 tractors.
• Technology: How logistics technology, 3PLs, routing tools, and asset-light models affect capacity usage.

Carrier profitability and equipment demand

Carrier profitability is one of the most important signals in the equipment cycle.

When fleets are profitable, they are more likely to replace aging equipment, expand capacity, modernize fleets, improve fuel efficiency, and reduce operating risk. When profitability weakens, fleets are more likely to delay purchases, extend trade cycles, and reduce capacity growth.

This is why Class 8 demand often follows carrier profitability. Fleets buy trucks when the economics support the investment.

Used truck values and replacement timing

Used truck values influence whether fleets are willing and able to replace equipment.

When used values are strong, trade economics improve and fleets may be more willing to replace tractors. When used values are weak, fleets may delay replacement because trade proceeds are less attractive or residual assumptions are under pressure.

Used values also provide insight into freight conditions, new truck availability, buyer demand, and the health of the secondary market.

New truck prices and total cost considerations

New truck prices affect replacement decisions, fleet economics, financing requirements, and total cost of ownership.

Equipment costs can rise because of materials, labor, technology, emissions systems, safety systems, taxes, and regulatory requirements. When new truck prices rise, fleets must evaluate whether the operating benefits of newer equipment offset the higher purchase cost.

Those benefits may include:

• Fuel economy improvements
• Lower maintenance costs
• Improved uptime
• Warranty coverage
• Driver recruiting and retention benefits
• Regulatory compliance
• Residual value expectations

Fuel economy and operating cost

Fuel economy is an important part of total cost of ownership. A newer tractor may cost more upfront, but improved fuel efficiency can reduce operating costs over time.

This tradeoff is one reason fleets evaluate replacement timing through both purchase price and operating cost. ACT considers fuel economy, equipment cost, residual values, and freight conditions when evaluating the economics behind commercial vehicle demand.

Regulatory impacts on equipment demand

Regulations do not create freight demand, but they can affect the equipment and capacity required to move freight.

Emissions rules, safety requirements, hours-of-service changes, electronic logging requirements, and other regulations can influence productivity, vehicle cost, fleet behavior, and replacement timing.

Some regulations may pull equipment demand forward before implementation. Others may change total cost of ownership or affect fleet productivity after implementation. ACT tracks regulatory developments because they can influence market-cycle timing, production planning, and fleet investment decisions.

Adjusting for Seasonality

In some data series, especially those that are trendy in nature like build, retail sales, and inventory, seasonal adjustment helps to smooth away month-to-month variances from things like the number of days in a month, predictable annual events, or the repercussions of end-of-year tax buying. In highly variable data series like net orders, where month-to-month changes can be extreme, seasonal adjustment does not smooth, but it does add depth to the analysis.

A positive seasonal factor indicates a month is typically stronger than average, a negative factor, weaker. Dividing the actual data point by its corresponding seasonal factor generates the seasonally adjusted data point.

As big carriers have gotten bigger, and the owner-operator market has largely become a used truck buyer business (at least for tractors), we have seen a material shift in the seasonal factors for Class 8 net orders through the past decade. Some already important months are becoming even more important. Less important months have become even less so. ACT anticipates order seasonal factors to continue to morph.

High peak and deep trough seasons generate a steady flow of seasonally adjusted order analysis. There are a few months every year when it is critical to understand the pull-forward impact of end-of-year tax related buying on January and February retail sales. There is typically around a nearly 30% swing in retail sales every year from December to January (days per month dependent).