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Truck Demand Expected To Remain Soft into 2026
Chris Fisher 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.
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Sharing of EV Battery Data Supported by METI
Akihiro Komuro The Ministry of Economy, Trade and Industry says it will support the development of an industry-wide system for sharing information on the degradation status of EV batteries. Toyota and Honda will provide battery-related data to used car dealers, insurance companies and others. The aim is to prevent the export of used EVs overseas and enable the domestic utilization of batteries containing critical minerals.
Currently, battery degradation is difficult to assess, resulting in low trade-in prices for used EVs in the domestic market. The fact that approximately 80% were exported overseas was a cause for concern.
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New GST Is Game Changer for Autos, Tractors
Aditya Kondejkar The September 2025 GST Council meeting introduced sweeping tax revisions that significantly lower GST rates across multiple vehicle and farm equipment categories. Tractors and their components now attract a 5% rate (from 12% for standard tractors, and from 18% for parts), while small cars, two-wheelers (up to 350cc), three-wheelers, buses, and certain commercial vehicles are enjoying reduced GST from 28% to 18%.
These changes are expected to improve affordability, stimulate demand (especially in rural and semi-urban areas), boost manufacturing and ancillary industries, and lead to job growth across the value chain.
Source: The Times of India. Read The Link
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GST Reform Is Big Opportunity for OEMs
Aditya Kondejkar India is preparing for one of its biggest tax reforms in recent years, targeting the Goods and Services Tax (GST) structure. If approved, the proposal will slash GST on small cars and two-wheelers from 28% to 18% and reduce GST on insurance premiums to between 5% and zero. The change, expected around Diwali, has the potential to reshape production planning and sales strategies for automobile manufacturers.
Source: Reuters. Read The Article
Impact on Small Cars and Two-Wheelers. Small cars and two-wheelers have traditionally been the backbone of India’s automobile industry, serving middle-class buyers who are highly price sensitive. However, in recent years, growth in these categories has slowed as buyers shifted toward SUVs, which now account for nearly half of passenger vehicle sales. By lowering taxes, the government aims to make small cars and two-wheelers more affordable, correcting the imbalance in demand and giving OEMs in these categories a much-needed boost.
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Vietnam Shifts To EV Motorcycles
Akihiro Komuro Vietnam, a country known for its large number of motorcycles, is experiencing controversy over its electric vehicle policy. The policy bans gasoline-powered motorcycles in certain areas of Hanoi, the capital, and has caused a stir. Honda, which holds an 80% share of the local motorcycle market, must rethink its strategy because most of its models run on gasoline. This sudden policy change could also disrupt daily life for residents.
In July, the Vietnamese government outlined bold measures to regulate gasoline-powered motorcycles in “Prime Ministerial Directive No. 20.” Starting in July 2026, operating gasoline-powered motorcycles within the Inner Ring Road in Hanoi will be banned. The Inner Ring Road spans over seven kilometers and includes the city center, home to government offices, the Japanese embassy, and the historic Old Quarter, a popular tourist destination.
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EPA Plans To Drop Phase 3 Emission Regulations
Chris Fisher In July, the Trump administration proposed a draft rule rolling back the Greenhouse Gas Phase 3 rule, among the last of – if not the biggest – looming Biden-era emissions regulations facing the trucking industry.
The proposal was announced jointly with Environmental Protection Agency Administrator (EPA) Lee Zeldin’s call to revoke the Endangerment Finding that has allowed presidential administrations to regulate greenhouse gases since 2009.
The repeal of greenhouse gas regulations is a long road that includes a lengthy rulemaking process and likely numerous legal challenges.
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Alternative Power Report, May 2025
The May 2025 issue of the Alternative Power Report contains articles on Volvo’s launch of the world’s first electric articulated Hauler, Aeson Power’s new sodium battery products, the IMO votes on the first-ever global carbon price on shipping, and a report on CATL’s next generation batteries. Read it all here. PSR
Guy Youngs is Forecast and Technology Adoption Lead at Power Systems Research
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Layoffs Begin in the North American Truck Segment
Chris Fisher Both Volvo and International Truck have initiated layoffs this year due to sluggish orders and high production capacity in preparation for a potential 2026 truck pre-buy ahead of the phase 3 GHG Emission Regulations scheduled for implementation in 2027.
Volvo Trucks North America plans to lay off up to another 350 workers from a Virginia plant as part of job cuts affecting up to 980 employees across the country since the beginning of the year.
Employees at the New River Valley plant in Dublin, Virginia, were notified of the workforce reduction this month, and their last day at the facility will be June 27, Volvo spokesperson Janie Coley said.
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