EU truck market trends 2023

Despite the macroeconomic background, the European truck market is being supported by pent-up demand, but there is a challenging year ahead

Zita Zigan, Director, Global Commercial Vehicle Forecasting

23 January 2023

European truck demand remains elevated, even though the macroeconomic background has become less supportive, which was reflected in somewhat slower transport activity during the second half of last year. Moving into the winter months, concerns over rampant inflation, high energy prices and rising interest rates painted an ever-gloomier picture for underlying truck demand drivers. For the time being, the market remains supported by high pent-up demand, due to sales being limited by supply constraints, such as component and material shortages. While these constraints have eased in recent months, and the supply side is becoming less of an issue, slowing demand drivers are becoming more of a concern. However, falling inflation and energy prices are expected to support demand by the second half of this year.

In the short term, supply-side problems may rear their head again, too, given the fragility of global supply chains and the unfolding situation in China following the abandonment of China’s zero-Covid policy. With Omicron infection rates currently rising rapidly, and millions of workers travelling home for the Lunar New Year, the risk of renewed lockdowns impacting factories has become all too real. But such disruption, if it materialises, should largely remain confined to the first quarter, in an echo of 2020. Europe would nonetheless be bound to feel a meaningful impact during the first half of the year.

Truck market trends within Europe over the past year have shown a striking disparity between Western Europe and the peripheral EU markets: Many of the EU accession markets recorded strong sales in the summer as the European Mobility Package contributed to strong demand from Central and East European fleets, but selling rates were falling rapidly during the second half of 2022. Full-year sales in these markets are expected to have risen in the double digits in 2022. Ongoing payback is expected in the affected markets in the EU periphery during 2023, with combined sales in these markets falling by more than 10%.The core Western European markets, on the other hand, displayed a more gradual recovery path over the course of 2022, with less fluctuation, and with selling rates continuing to trend upwards towards the end of the year. There remains potential for continued – albeit modest – growth in 2023. The combination of these trends means that full-year sales in the EU+ region as a whole are likely to stagnate in 2023 as the balance of growth shifts from East to West.

Key elements of the EU Mobility Package came into effect in 2022. The package of new legislation aims to create consistent standards supporting driver safety and fair business practices. Cabotage operations have been severely restricted, with a requirement for drivers and vehicles to return to the country where they are registered on a regular basis, and for transport companies to prove that they operate in the EU member state in which they are registered. The changes have resulted in a reduction in freight transport capacity and have further intensified the acute European driver shortage, which has been additionally exacerbated by the ongoing war in Ukraine.

The ratio of km driven to freight transported has risen as a result of additional empty truck journeys necessitated by compliance. The new requirements have created capacity constraints in the road haulage industry, resulting in additional short-term demand for heavy-duty trucks in 2022.

The new rules have raised transport costs, which are being passed on to customers and contributing to inflationary pressures affecting the industry. Eastern European truck operators have been under pressure to absorb some of the costs, with a number establishing operations in Western markets to maintain a competitive advantage.

Opinion is divided, and, with a challenging year ahead, the issue is bound to remain a hot topic in 2023.