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ST. PAUL, MN — The Power Systems Research Truck Production Index (PSR-TPI) increased from 106 to 120, or 13.2%, for the three-month period ended June 30, 2019, from Q1 2019. The year-over-year (Q2 2018 to Q2 2019) loss for the PSR-TPI was, 122 to 120, or 1.6%.

Commercial truck demand in North America and portions of Eastern Europe is expected to be relatively strong for much of the year, at the same time most other regions are experiencing a slowdown. PSR expects a continued slowdown in medium and heavy truck demand for most regions in 2020.

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 CV Link™, the proprietary database maintained by Power Systems Research.

Global Index: Much like the global economy, medium and heavy truck demand is expected to slow this year and into 2020. Currently, a global recession is not forecasted but rather a cooling off is expected. According to IHS Markit, global GDP was 3.2% in 2018 and is forecasted to edge down to 2.9% in 2019 and 2.8% in 2020. These indicators align with what PSR is seeing in the global medium and heavy truck market.

North America: While demand for medium and heavy commercial trucks has been strong this year, order rates have started to decline more than expected and some 2019 build slots have opened in the class 8 segment. Class 8 demand has started to slow as freight rates
continue to deteriorate. It is believed that an overall slowing of the market along with concerns about a trade war is affecting demand.

Europe: Overall, sales and production for medium and heavy commercial trucks in Europe is expected to be flat this year compared with 2018. Production in Western Europe is expected to decline by 4% while production in Eastern Europe is expected to increase by 15.5% as the trucking companies continue to replace older vehicles.

South Asia: After very strong demand in the medium and heavy truck segment during the past few years, it appears the regional economies are cooling somewhat, and production is expected to decline by 14% this year over 2018. The decline is expected to be led by India with a drop of 16% this year. Truck overcapacity of 15% – 18%, along with an overall slowdown in the automotive segment, will contribute to this. The implementation of the BSVI emission regulations in April 2020, also will have a negative impact as the OEMs begin equipping trucks with the higher cost emission technology throughout the year.

South America: Medium and heavy truck production is expected to increase by 7% this year, driven by Brazilian production. Improved demand in both the domestic and export markets continues to drive sales. After several years of low demand as a result of relatively young fleets and a very poor economy, demand started to improve during the past few years as the truck companies needed to replace their older trucks.

Japan/Korea: Medium and heavy truck production is expected to decline by 2% this year as both the domestic and export economies slow. Some of the decline in exports may be attributed to uncertainty surrounding tariffs. Most of the production in Japan is for export, which provides for very diverse vehicle markets. Greater China: Medium and heavy truck demand is expected to decline this year primarily due to a slowing economy, relatively high truck capacity and higher truck prices partly due to the cost of emission technology and lower freight rates. It is unknown how much of an impact the trade tariffs play into this. Given the combination of a slowing economy and relatively high truck capacity, demand is expected to be soft during the next few years.

The next update of the Power Systems Research TPI will be in October 2019 and will reflect changes in the TPI during Q3 2019. PSR

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

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

The Power Systems Research Truck Production Index (PSR-TPI) decreased from 115 to 109, or 5.2%, for the three-month period ended March 31, 2019, from the fourth quarter of 2018. The year-over-year (Q1 2018 to Q1 2019) change for the PSR-TPI was basically flat,  moving from 110 to 109, or .91%.

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 CV Link™, the proprietary database of commercial vehicles maintained by Power Systems Research.

Here is the analysis of changes by region.

Summary: Commercial truck demand in North America and portions of Eastern Europe are expected to be relatively strong for much of the year while most other regions are experiencing a slowdown.  However, no regional recessions are expected.

Global Index: Much like the global economy, medium and heavy truck demand is expected to slow this year and into 2020.  Currently, a global recession is not forecasted. However, a cooling off is expected.  According to IHS Markit, global GDP was 3.2% in 2018 and is expected to edge down to 3.1% in 2019 and 2.9% in 2020.

North America: Medium and heavy commercial truck demand continued to be strong during the first quarter driven by the current state of the economy.  Class 8 truck demand is expected to remain strong through most of the year, but a cyclical slowdown is expected toward the end of 2019 into 2020.  The medium duty segment continues to enjoy strong consumer and vocational demand.

Europe: Despite the slowing European economy primarily due to weak external demand and political uncertainty, MHCV sales are expected to remain relatively strong this year.  Demand in Eastern Europe is expected to be stronger than Western Europe as the trucking companies continue their replacement demand.

South Asia: After exceptionally high sales during the past two years, MHCV demand is expected to decline in 2019 primarily due to weakness in India.  Truck overcapacity of 15% – 18%, along with an overall slowdown in the automotive segment will contribute to this situation.  With the industry focusing on the BS-VI emission regulations scheduled for implementation in April 2020, we can expect some choppy demand toward the end of the year.

South America: Primarily driven by Brazil, MHCV demand continues to improve after several years of poor sales as a result of a weak economy.  Domestic and export sales started to improve in 2017 and continued through last year.  While truck exports are the main reason for this increase, domestic demand has also significantly improved during the past year.

Japan/Korea: Demand for MHCV’s is expected to decline slightly this year as both the domestic and export economies slow.  Most of the production in Japan is for export which provides for very diverse vehicle markets.

Greater China: After two years of very high demand in the heavy commercial truck segment, demand is expected to decline this year primarily due to a slowing economy and relatively high truck capacity and higher truck prices partly due to the cost of emission technology and lower freight rates.  The combination of a slowing economy and relatively high truck capacity, demand is expected to be soft during the next few years.

The next update of the Power Systems Research TPI will be in July 2019 and will reflect changes in the TPI during Q2 2019.  PSR