ACT Research notes encouraging signs for 2023

In its latest North American Commercial Vehicle Outlook, ACT Research, the global commercial vehicle consultancy, said it is seeing signs that the expected downturn in the heavy-duty truck market may not be as likely as once thought.

Production of heavy-duty trucks, such as those built at Volvo’s New River Valley plant in Dublin, Va., is expected to remain positive through 2023, according to ACT Research. (Photo: Volvo Trucks)

ACT reported moderating core personal consumption expenditures (PCE), slowing jobs growth, and decelerating wage inflation indicate the Fed’s campaign to bring inflation under control may be bearing fruit and the need for further interest rate increases may be limited.

“The critical factor in forecasting 2023 is identifying the point at which lower freight volumes and rates, coupled with higher borrowing costs compress carrier profits sufficiently to end the cycle,” said Kenny Vieth, ACT’s president and senior analyst. “Our current thinking is the negatives begin to weigh on orders as soon as the first half of ‘23, and more meaningfully by the second half of ’23.

“However, with healthy backlogs, early 2023 carrier profitability strength, and the potential for a CARB-induced prebuy in California, there is a compelling case to be made for production volumes to be sustained at end-of-2022 levels through all of 2023.”

Reflecting softer macro and freight trends, Vieth said ACT’s forward-looking Tractor Dashboard remained in negative territory in November. “While the dashboard has signaled incoming softness since March, the low single-digit negative readings seen in 2022 are mild, relative to the double-digit negative prints witnessed in late 2015 and early 2019,” Vieth said. “Part of the ‘strength’ in the current environment relates to the supply constraints that limited the industry’s ability to build all the trucks that would otherwise have been produced in 2021 and 2022.”