Global Truck

Zita Zigan, Director, Global Commercial Vehicle Forecasting

22 July 2020

Global Truck market snapshot for H2 2020

Global vehicle sales, including Medium and Heavy Truck sales, plummeted at an unprecedented rate over the March-May period as stringent lockdowns across the world brought activity to a near standstill. But economic growth is expected to normalise after the extreme shock in Q2 once the measures are lifted. The assumption of a relatively swift bounceback is based on the nature of the crisis: this is not a recession that has been triggered by economic imbalances or policy mistakes. Rather, it is the result of economies being switched off in response to an external shock. This is in contrast to the 2007-2008 global financial crisis, which was followed by a long and arduous recovery. However, with hundreds of millions of people newly unemployed and the coronavirus pandemic still ongoing, it is also clear that a return to pre-crisis levels of demand is unlikely to occur over the next year or two.

Global Truck sales fell by 24% in Q1, with sales in many markets continuing to decline steeply as lockdowns hit during the early stages of Q2. But data from across the demand-side spectrum (orders, sales, freight activity) indicate that April marked the nadir for many countries, with a slew of somewhat stronger results emerging in May. The reopening of most factories, in May, enabled the industry to ramp up production in the latter stages of Q2. Overall, as a result of the anticipated negative economic impact, sales and production are expected to fall significantly in 2020 (20-25%), with a V-shaped recovery taking hold in H2.

Results were mixed across the APAC region. China saw a resurgence of activity in April, which continued in May, albeit with lessening momentum. By contrast, India saw a 61% decline in Q1; with a nationwide lockdown imposed in late March, results were set to become worse in Q2 (with zero sales or production reported in April and estimates of 90% declines in May).

North American forecasts have been reduced further in response to the unfolding of the pandemic in the US and the resulting deterioration in the economic outlook. Full-year sales are expected to fall by nearly half, compared to 2019. However, we are also taking into account some recent green shoots. These include a 57% rebound in May’s Class 8 net order intake, compared to April.

The European Truck market has tracked macroeconomic developments, with sales and production collapsing from the end of Q1. With most countries implementing stringent shutdowns and social distancing measures in order to contain the spread of the virus, the macroeconomic backdrop had deteriorated significantly by late March, sending Truck sales into a tailspin. However, positive signals were emerging by May, with confidence measures responding positively to stimulus packages that have been implemented by policymakers to mitigate the crisis. In many (though not all) countries, selling rates improved in May, compared to April.

As lockdowns ease, Truck selling rates in many countries should pick up during the second half of the year. The wider macroeconomic picture sees a fairly strong year-on-year recovery in 2021, though we do not expect to see pre-crisis levels of demand being reached again before 2022/2023.

 

Global Truck Sales: World minus China