How things have changed. Less than a year ago the industry was gearing up for a huge 2026 class 8 truck pre-buy ahead of the phase 3 GHG emission regulations that would add significant cost to the price of a truck. Road freight was expected to rebound after the post covid freight recession, and the heavy truck replacement cycle was expected to begin. OEMs filled dealer lots in anticipation of strong demand starting in early to mid-2025 and lasting through all of 2026.
As a result of very strong freight shipments and supply chain disruptions during the Covid era, fleets were purchasing as many trucks as possible which resulted in very high truck sales from 2022 – 2024. This resulted in truck overcapacity within the market.
The post Covid freight recession has continued through 2025 and is expected to remain through much of 2026. Primary drivers behind the freight recession include higher levels of inflation and interest rates along with truck overcapacity during the past few years.
Heavy dealer inventories in anticipation of a 2026 pre-buy and expected improvement in the freight market has resulted in high dealer inventories that are not currently shrinking. OEMs will need to further reduce production levels in order to re-balance the inventory.
Higher material costs due to increased tariffs are also reducing new truck demand and the uncertainty of how future tariffs will impact truck cost and road freight are weighing heavily on fleet decisions to replace older trucks.
The industry is also facing uncertainty surrounding the phase 3 GHG emissions regulations, which are being reviewed by the EPA. Historically, the fleets pre-bought trucks ahead of regulation implementation to avoid additional vehicle cost and possible reliability issues surrounding the new emission technology.
The outcome of this review could result in the implementation of the phase 3 GHG emission regulations or remain with the current phase 2 emission regulations or amend the phase 3 GHG regulations.
I suspect the EPA will amend the phase 3 regulations and keep the MY2027 engine rules but eliminate the costly warranty extensions and cancel all future emission regulations through 2032. However, there will certainly be legal challenges to any regulatory rollback.
Currently, the biggest barrier to new truck adoption is the uncertainty surrounding the above issues. Hopefully, the economy has bottomed out and the industry will get more clarity during the next few months. New truck demand is expected to rebound later in 2026 and continue through much of 2029 as the fleets will need to update their trucks. PSR
Chris Fisher is Senior Commercial Vehicle Analyst for Power Systems Research
