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Updated October 27, 2025

Investor Sentiment Turns Defensive as Freight Weakness Extends and Equipment Orders Lag

With freight fundamentals still soft and equipment investment subdued, 2025 continues to shape up as a margin-management year rather than one of growth. Demand visibility remains limited, but several potential policy and rate catalysts could reprice sentiment heading into 2026.

As of October 2025, the North American freight and commercial vehicle markets remain subdued but stable, according to ACT Research’s latest NA Commercial Vehicle OUTLOOK and Freight Forecast. Freight volumes are down roughly 5% y/y, Class 8 orders remain down 45% y/y, and fleet sentiment continues to favor capital preservation and replacement-level investment.

For investors, the message is clear: this is a cost discipline and capital agility cycle. Until freight demand strengthens or regulatory clarity triggers renewed fleet spending, earnings performance across OEMs, suppliers, and transport operators will be driven by margin control, balance sheet flexibility, and asset efficiency rather than top-line expansion.

Key Takeaways for Investors

1. Class 8 Orders Remain Weak, Signaling Persistent Capital Caution

Class 8 net orders totaled 20,562 units in September, marking the eighth consecutive y/y decline and the weakest September since 2019. This sustained softness reflects structural caution, not just seasonal moderation.

OEMs are maintaining disciplined production schedules and managing backlogs tightly, emphasizing quality and pricing integrity over unit volume. Supplier sentiment mirrors this caution, with order pipelines for components and subassemblies continuing to lag.

For investors, that translates into ongoing revenue headwinds for manufacturers through early 2026—but also a healthier inventory and working-capital position compared to prior downcycles.

2. Freight Volumes Flat, with No Clear Inflection Yet

ACT’s October Freight Forecast shows for-hire volumes remaining down ~5% y/y, with little momentum in consumer, industrial, or cross-border segments. Retail, housing, and manufacturing-related freight remain particularly weak.

Spot and contract rates are both near cycle lows, compressing carrier profitability and reinforcing a defensive tone in capital spending. Intermodal activity remains down 6% y/y, confirming that modal substitution is not offsetting overall softness.

Investors should expect transportation equities to emphasize cost control, asset utilization, and pricing discipline rather than growth-driven narratives through year-end.

3. EPA 2027 Uncertainty Still Delaying Prebuy – Policy Catalysts in Focus

Regulatory ambiguity surrounding the EPA 2027 low-NOx and GHG Phase 3 rules remains the central wildcard for the sector. Fleets continue to defer large-scale orders as litigation and political pressure make a 2027 implementation uncertain.

However, ACT notes that a compressed prebuy window in 2026 remains a credible risk, should regulatory clarity arrive in early 2026. A sudden policy confirmation could drive a short but intense spike in demand, favoring OEMs and suppliers with flexible capacity and well-managed supply chains.

Investors should monitor federal updates closely—regulatory clarity will be the single largest upside catalyst for truck and component manufacturers over the next 12 months.

4. Pricing Power Shifts Downstream as OEM Margins Compress

Tariff-related cost pressures remain embedded, adding roughly 3–5% y/y to new equipment prices. However, with freight volumes weak and financing costs elevated, OEMs are increasingly absorbing a greater share of those costs to protect unit flow.

This is shifting pricing leverage downstream toward large fleets with procurement scale and financing leverage. Upstream segments—particularly component suppliers and smaller OEMs—face the greatest margin compression.

For investors, margin durability, working-capital efficiency, and financing exposure are now key differentiators in valuations. Expect a stronger bifurcation between capital-efficient manufacturers and asset-heavy carriers as credit conditions tighten.

Bottom Line: A Holding Pattern That Rewards Discipline

The October landscape reinforces a “flat but stable” outlook for the freight and equipment markets. Growth remains elusive, but balance sheets are healthy and cost structures leaner than in prior downcycles.

For investors, this is not a volume story—it’s a timing and positioning story. Capital should favor companies with:

• Strong free cash flow generation
• Flexible production or service models
• Balance sheet strength ahead of the next regulatory or macro inflection point

Until demand or regulatory clarity improves, performance will hinge on efficiency, margin control, and adaptability. The sector is in a waiting game—but those positioned for agility will be first to capture the next upturn.

Want to hear more from ACT Research? Analysts Lydia Vieth and Ann Rundle explain the current market and regulations, as well as their projections for future electric truck adoption, battery technologies, and beyond.

Where's the electric truck market headed now? (12:56 minute watch)

Market Guidance for Dealers & Leasing Companies

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