Ahead of the Curve: Commercial Vehicle Insights

By: Rob Allerton, Vice President, Commercial Vehicle Membership

In 2024, the commercial vehicle and trailer production landscape is facing significant challenges. Recent forecasts, including insights from MEMA's OE Vehicle Supplier Barometer survey, indicate a roughly 10% reduction in anticipated North American Class 8 truck production this year. Current estimates suggest production will range between 290,000 and 300,000 trucks this year—lower than earlier predictions made during a robust first half of the year. While these figures are historically strong, they feel diminished given the high build rates seen in recent years.

A key factor contributing to this market softening is the decline in freight rates, which is negatively impacting fleet profitability. Additionally, the upcoming presidential election has prompted some fleets to delay capital expenditures as they await its outcome. Concerns surrounding a potential pre-buy ahead of the 2027 emissions standards may also be dampening the immediate demand for new trucks. While some fleets are eager to participate in a pre-buy, current financial constraints and high interest rates limit their flexibility. Ongoing inflation worries, coupled with elevated interest rates, are further inhibiting fleet purchase decisions. The prevailing sentiment suggests a market recovery for Class 8 trucks may not materialize until late 2025, with Q3 or Q4 being the most likely timeframe.

According to MEMA's latest survey, suppliers are actively responding to these market challenges, with over 86% reporting measures to bolster their financial performance. Actions include layoffs, hiring freezes, postponed capital purchases, reduced overtime, and stringent spending controls. Suppliers are also seeking increased operational flexibility to adapt to fluctuating production volumes.

The trailer market is similarly affected, with many fleets opting to extend the life of their existing trailers rather than invest in new purchases, thereby alleviating margin pressures. However, the aftermarket sector is experiencing positive conditions as fleets hold off on new tractor and trailer acquisitions.  The production of trailers in 2025 is expected to be similar to 2024 levels.

On the front of alternative powertrains, commercial vehicle suppliers remain skeptical, particularly for Class 7-8 applications. Both suppliers and fleets are grappling with uncertainties, including insufficient charging infrastructure, a shortage of qualified technicians, low freight rates, and a considerable cost gap between electric and internal combustion engine vehicles. The sentiment suggests that the challenges of operating costs and infrastructure costs will persist for years, keeping demand for alternative powertrains low at least until 2030.