As published in the latest release of the North American Commercial Vehicle OUTLOOK, expectations for Class 8 and trailers are lowered as the recovery in freight markets remains elusive.

“Within the broader Class 8 and trailer markets, US Class 8 tractors and van trailers bore the brunt of the markdowns as freight metrics have failed to gain traction,” according to Kenny Vieth, ACT’s President and Senior Analyst. “Less money in carriers’ pockets and lower industry build rates in 2024 also push down on 2025 and, to a lesser extent, 2026.”

Manufacturing readers especially can appreciate how difficult it has been to attract labor the past two-plus years. If circumstance forces the industry to materially cut production in 2024, thereby having to shed labor, supply-chain integrity could be compromised.

Vieth added, “If layoffs do come to pass, it will be difficult for the industry to scale rapidly in 2025 and 2026 when US and Canadian truckers and dealers will want all the equipment the industry can build. ACT’s research suggests that between prices, taxes, and other affiliated costs, MD and HD vehicle costs will rise by between 12% and 14% as the EPA’s Clean Trucks regulation goes live in 2027. As such, we believe the OEMs will be at least partially successful in convincing customers to begin EPA’27 prebuying in 2024. Starting prebuying earlier should help moderate runaway demand into 2026, but risks prolonging the freight cycle downturn.”

ACT Research believes that “it’s different this time” factors are at work in 2024, and those factors will help support a fundamentally weak US tractor market. Those factors include ongoing pent-up vocational truck demand, strong tractor demand in Mexico, and labor hoarding.