According to the latest release of ACT Research’s North American Commercial Vehicle Outlook, 2021 is now being forecast as the transition year as global economies and North American commercial vehicle demand move from COVID-19’s negative impacts into a meaningfully better situation in 2022.
“Without clear forward visibility on the COVID-19 endgame, the crystal ball is particularly opaque, as the economy begins to reemerge from its medically-induced coma,” says Kenny Vieth, president and senior analyst, ACT Research. “Even as we work through the logic and implications of bigger picture issues, more practical considerations for 2021 forecasts arise.”
Vieth says one reason for such uncertainty the herculean effort required to rapidly ramp up production.
“History shows that even from the lowest lows, the manufacturers can’t snap their collective fingers and bring production up immediately,” he says. “Returning to normalized production levels is a process that is hard to rush.”
Vieth adds that coupling an otherwise structurally sound pre-COVID economy with strong governmental support and rising pent-up demand, there is a case for the economy to rebound into 2021.
“We believe maturing millennials will be the key to pushing the economy forward as they resume their transition to marriages, kids, and mortgages,” he says.
The medium-duty space is equally murky, adds Vieth, since the sector took a direct hit from COVID-19 and the consumer portion of the economy is severely weakened.
“The heavy Class 8 and trailer markets are seeing falling orders, rising cancellations, and backlogs getting pushed to later build dates. When the economy ultimately rebounds, accessible capacity is likely to be short, leading to strong rebounds in freight rates, carrier profitability, and ultimately unsated vehicle replacement demand,” he says.
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