Canadian Class 8 truck registrations plummeted nearly 20% in 2020, to 26,000 units according to data from IHS Markit. However, they’re expected to rebound nearly 15% to 30,000 units this year, before climbing to 34,000 in 2022 and 36,000 in 2023.
Meanwhile, Classes 4-7 registrations fell nearly 30% last year to 13,000 units and a slower recovery is expected to 14,000 registrations this year and 16,000 in 2022. Andrej Divis, director, automotive, global heavy truck research at IHS Markit shared the data in a presentation on the North American commercial vehicle market during the virtual Work Truck Show March 9.
The forecaster presented a more positive bounce-back for the U.S. market, and for its overall economy.
“We are seeing a different dynamic in Canada,” Divis said after giving a positive economic outlook for the U.S. “There are specifics related, for example, to its construction market and oil sector. On those last two points, it has more headwinds than the U.S. does.”
In the U.S., IHS Markit sees a 5.7% economic expansion this year – essentially wiping out the entire contraction in 2020 – with 4% growth possible for 2022. Divis cited strong gains in consumer and residential spending, as well as housing starts, which will all support freight demand.
Meanwhile, he said surging Class 8 truck orders over the past few months are not unique to the heavy truck industry – business spending is picking up in other sectors as well. Imports and exports are also expected to recover. The downside risk comes in the form of new Covid-19 variants and whether they can be controlled by existing vaccines.
Divis said e-commerce is a trend that won’t reverse, but its growth may slow, especially as people are able to resume spending money on services rather than things.
“That will be a bit of a headwind to truck sales, balancing some of the other strengths,” he said.
Last year, small fleets were responsible for a growing percentage of truck orders but recent order activity suggests large fleets are now placing orders, most of which represent replacement demand.
“However, as we get into 2021 with those expected economic growth rates, some capacity expansion is going to be necessary to handle that level of economic activity,” Divis said.
Classes 4-8 registrations in the U.S. collapsed by 20% last year, with Class 8 falling 26%. The standout was the Class 5 segment – the only segment to have added share as a percentage of the overall commercial vehicle market while also adding volume.
Class 7 demand was hit the hardest, “registering one of the lowest volumes that we’ve seen in the last 10 years,” said Divis. In Class 8, the tractor market suffered the worst decline while straight truck demand fared better. Small fleet purchases rose in the Class 8 segment from about 50% of registrations in 2019 to 58% in 20202.
Ford held onto is place as leader in the Classes 4-6 categories, but slipped to #2 when adding Classes 7 and 8, where Freightliner assumes the lead. In Class 8, Mack, Peterbilt and Western Star saw gains, which Divis attributed to the strength of the straight truck segment compared to highway tractor.
Another trend IHS Markit noticed was a decrease in the share of diesel-fueled Classes 4-8 trucks, especially in the lighter segments. But it’s not electric or fuel cell that’s eating share, it’s gasoline.
“Manufacturers have continued to add gasoline options,” Divis reasoned. Diesel now fuels 78% of Classes 4-8 trucks, down from its long-term average of 83%.
The average age of the Class 8 fleet is 12 years, up from 11 in 2008. The average for Classes 4-8 is 13.8 years, slightly older than the 12.8 years seen in 2008.