Chris Fisher

St. Paul, MN — The Power Systems Research Truck Production Index (PSR-TPI) increased from 109 to 147, or 35%, for the three-month period ended Dec. 31, 2020, from the Q3 2020. The year-over-year (Q4 2019 to Q4 2020) gain for the PSR-TPI was 121 to 147, or 21%.

The PSR-TPI measures truck production globally and across six regions: North America, China, Europe, South America, Japan & Korea and Emerging Markets.

This data comes from OE Link™, the proprietary database maintained by Power Systems Research.

Global Index. Overall, this year is expected to be an improvement in commercial vehicle demand compared with 2020.  While the Coronavirus is expected to remain through much of this year, the negative impact on the global economy should not be as significant as it was in 2020.

All Regions. With the exception of China, PSR expects all of the other regions to experience improvement in commercial vehicle demand this year and likely into 2022 as fleets look to replace their aging vehicles. 

North America. Commercial truck demand rebounded in Q4 2020 particularly in the class 8 segment.  Order rates for class 8 came in stronger than expected which bodes well for production through at least the first half of 2021.  Freight rates remain relatively high and this trend is expected to continue throughout the year.  Congress passed another round of economic stimulus which will also bode well for commercial vehicle adoption.  While the Coronavirus continues to negatively impact the economy overall, PSR does not believe the effects will cause a significant slowdown in demand this year.

Europe. Through eleven months of 2020, European commercial truck sales declined by 27% compared with 2019.  Heavy truck sales declined by approximately 29% during the eleven-month period.  However, Q4 2020 showed significant improvement in sales and orders which will bode well for production this year.  The medium and heavy bus segment also showed significant improvement in the fourth quarter.  While the Coronavirus will continue to be a drag on regional economies, PSR expects the worst to be behind us and gradually improving demand is expected moving forward.

South Asia. The Indian economy has recovered at a much faster rate than expected during the Q4 2020. In the MHCV segment, class 6 & 7 performed better due to the rapidly expanding e-commerce sector and improving automotive sales. The utilization rate of the class 8 segment is improving but has yet to cross the threshold to trigger significant new demand. The bus segment continues to struggle primarily because of the work-from-home push by the government, travel restrictions and people generally avoiding public transportation.  The industry is likely to witness a headwind due to overcapacity in the market, continued driver shortages and the increased traction of rail transport.  The recently launched PLI scheme will provide an additional push to the market from 2022.

South America. Medium and heavy commercial vehicle production declined by approximately 27% in 2020 with heavy truck and buses seeing the sharpest decline.  Much like North America and Europe, demand started to improve during the fourth quarter of 2020 and PSR expects production to increase to the levels seen in 2019 prior to the Coronavirus outbreak.  Production will be driven by both the domestic and export markets this year.

Japan/Korea. While PSR expects medium and heavy commercial vehicle production to improve by double digits this year, it will likely be 2022 before demand improves to replacement and expansionary levels.  Export demand is expected to improve quicker than domestic demand in both Japan and South Korea.

Greater China. Medium and heavy commercial truck production achieved record levels in 2020 primarily driven by the government requirement to replace all China III and lower emission vehicles with vehicles meeting China V or China VI emission requirements. This, along with stricter punishment of overloaded vehicles in big cities and also in some small cities and rural areas, drove the sharp increase in demand. 

This will result in a significant drop in truck demand this year.  The heavy truck segment will see the most significant decline.  The China VI emission regulation is scheduled to be implemented on July 1, which may cause some level of pre-buy in the first half of the year followed by a sharp drop off in demand in the latter half of 2021.

The next update of the Power Systems Research TPI will be in April 2021 and will reflect changes in the TPI during Q1 2021.  PSR

Jim Downey is vice president – global data products at Power Systems Research

Chris Fisher is the senior commercial vehicle analyst at Power Systems Research

St. Paul, MN — The Power Systems Research Truck Production Index (PSR-TPI) increased from 36 to 109, or 203%, for the three-month period ended Oct. 31, 2020, from the Q2 2020. The year-over-year (Q3 2019 to Q3 2020) loss for the PSR-TPI was, 117 to 109, or 6.8%.

The PSR-TPI measures truck production globally and across six regions: North America, China, Europe, South America, Japan & Korea and Emerging Markets.

This data comes from OE Link™, the proprietary database maintained by Power Systems Research.

All Regions: Most of the regions experienced a sharp decline in production during the late first quarter into the second quarter but for the most part, demand and production has stabilized.  However, demand in India continues to struggle for several reasons including the virus.  China is on track to have a record year for medium and heavy truck production.

Global Index: In general, global demand for medium and heavy commercial vehicles will decline this year is expected to gradually improve during the next few years as the pandemic wanes.

North America: While commercial vehicle demand plummeted earlier this year, primarily driven by the impact of the Coronavirus, demand has since rebounded, but not to the levels of last year.  While there is a threat of the virus making a resurgence in Q4 2020, PSR believes this will not cause another sharp drop in demand but rather a slowdown in sales.  Much will also depend on the government’s implementation of an economic stimulus package which is still up in the air at the time of this writing.

Europe: During the first half of this year, medium and heavy truck registrations in the EU declined by 43% compared to the first half of 2019; bus registrations declined by 35%.  While we believe demand has stabilized, sales are expected to be down significantly over last year.  Export demand also has declined sharply this year, primarily due to the impact of the coronavirus on the global markets.

South Asia: Coupled with price hikes in BSVI era in India, increasing fuel prices (13% increase from January to August), economic recession, lower freight demand, driver and labor shortages (loading/un-loading of goods) – the headwinds in MHCV industry continue and the year 2020 will go down as the worst year for the MHCV industry.   Driven by social-distancing and work-from-home policies, muted or no demand for buses from the education sector and office staff, the bus segment is also one of the worst hit with our estimates of only 10-15% in-service bus fleets being operational.  The improving rail freight infrastructure, the proposed vehicle extension policy, shifting focus on the used-truck market and under-utilization of in-service vehicle population are likely to further dampen the MHCV outlook in the mid-term.

South America: Through the first eight months of the year, medium and heavy truck production in Brazil declined by 36.5% while bus production declined by 55.6% compared to 2019.  While there has been some improvement during the past few months, domestic and export demand will continue to be soft throughout the remainder of this year.  Production was down sharply in April as most of the OEM’s and suppliers shut down production facilities as a result of the virus outbreak.

Japan/Korea: Much like the rest of the world, medium and heavy vehicle demand declined sharply in late Q1 and into Q2 as a direct result of the Coronavirus pandemic.  While demand has since stabilized in both the domestic and export markets, it will still be a few years before vehicle replacement levels improve to more historic levels.

Greater China: After declining sharply in February and into March, medium and heavy truck production has been extremely strong this year.  Much of this has been driven by the government mandate to eliminate the current Euro III and earlier emission complaint trucks and replace these with new Euro V vehicles. 

The plan is to have this completed by the end of 2020.  This along with stricter punishment of overload vehicles not only in big cities, but also to some small cities and rural areas.  As a result of this, PSR expected demand to decline during the next few years.  

The next update of the Power Systems Research TPI will be in January 2021 and will reflect changes in the TPI during Q4 2020.  PSR

Jim Downey is vice president – global data products at Power Systems Research

Chris Fisher is the senior commercial vehicle analyst at Power Systems Research