Act Research

Commercial vehicle production in 2021 is a question of supply, not demand, says ACT Research

May 12, 2021
The current order-to-build lag more than doubles traditional ranges for backlog-to-build ratios, says Kenny Vieth, president and senior analyst, ACT Research.

According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, the question of commercial vehicle demand for 2021 has already been answered, but the number of units to be built this year remains a question of supply.

The N.A. CV OUTLOOK is a robust report that forecasts the future of the industry, looking at the next 1-5 years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides a complete overview of the North American markets, as well as takes a deep dive into relevant, current market activity to highlight orders, production, and backlogs, shedding light on the forecast. Information included in this report covers forecasts and current market conditions for medium and heavy duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.

“In previous months, we have used 2018 as a corollary for achievable Class 8 output in 2021: From a nearly identical January production rate starting point, the industry managed to build nearly 325k units in 2018,” said Kenny Vieth, president and senior analyst, ACT. “Getting to that 2018 volume included the supply chain working through not only transitory ramp-up/synchronization issues, but also labor constraints in the full-employment economy of that time.

“From a commercial vehicle demand perspective, orders, from medium duty trucks to heavy duty tractors and trailers, remain elevated, with backlogs for tractors and van-type trailers, at current build rates, pushed-out 12 months,” he said. “That order-to-build lag more than doubles traditional ranges for backlog-to-build ratios.

“In 2021, those early cycle challenges are starting to moderate, only to be replaced by new capacity constraints in this period of synchronized global economic expansion amid an ongoing pandemic,” Vieth said. “The list of constraints remains long and includes chip and steel shortages, as well as plastic resin production impacted by power failures in Texas, backlogged throughput at ports, and pandemic supply-chain challenges like keeping and growing staff.”

For more information about ACT’s N.A. Commercial Vehicle OUTLOOK, click here.