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Commercial vehicle registrations down 4.2% this year, IHS Markit says

Nov. 9, 2016
New registrations of commercial vehicles in GVW 4-8 classes are down 4.2 percent through August of this year, according to new research presented by IHS Markit during the annual Automotive Aftermarket Products Expo (AAPEX).   Registrations of new Class 8 commercial vehicles are down 17.1% and Class 7 are down just .6%, while all other GVW classes experienced gains over the same timeframe last year.  Freightliner leads the market for Classes 4-8 vehicles with 27% of registrations during the January to August timeframe.

New registrations of commercial vehicles in GVW 4-8 classes are down 4.2 percent through August of this year, according to new research presented by IHS Markit during the annual Automotive Aftermarket Products Expo (AAPEX).

Registrations of new Class 8 commercial vehicles are down 17.1% and Class 7 are down just .6%, while all other GVW classes experienced gains over the same timeframe last year. Freightliner leads the market for Classes 4-8 vehicles with 27% of registrations during the January to August timeframe.

New vehicle registrations by fleets operating more than 500 vehicles have declined, resulting in the decline of tractor trucks versus the same period in 2015. “These large fleets have been in a replacement cycle for the past five years, and large fleets have accounted for more than 50% of Class 8 new registrations during this period,” said Gary Meteer, director of commercial vehicle solutions at IHS Markit. “Some of this year’s slowing may be the result of uncertainty in the demand for goods with the general slowing of the economic growth in the most recent quarters.”

When comparing new registrations against vehicles in operation, these same businesses (those that operate more than 500 in their fleet) have 43% share of new registrations through August, while only representing 22% of vehicles in operation.

Cummins leads the industry in share of diesel engines with 38.4% of the market.

The analysis found some interesting detail on the commercial vehicle market in Canada. During the first eight months of 2016, new commercial vehicle registrations (classes 4-8) in Canada were down 8.2% from the same timeframe last year, with the largest declines in Class 8 trucks (down more than 21%). Growth segments in Canada include Class 3 at 1.7%; Class 4 at 12.5% growth, and Class 7 with nearly 6% growth through August.

“The overall success of the Canadian commercial vehicle market is tied directly to the demand for Class 3 and Class 8 vehicles,” Meteer said. “Typically, new registrations of Class 3 and Class 8 vehicles account for approximately 75% to 78% of new commercial vehicle registrations in Canada and the two Classes are about equal in share.”

According to the analysis, through August 2016, new Canadian registrations of Class 8 vehicles represent just 34% of total new registrations, the lowest level ever reported for Class 8 share of new registrations, surpassing the previous low in 2009 of 35.2%. However, class 3 new registrations are at a record high of 43%, surpassing previous record high share of 40.6% in 2014. New registrations of class 3 vehicles to individuals were 40% in the first eight months of the 2016 CY, at their highest level since the 2009 CY, when individual registration accounted for 42% of Class 3 new registrations.

The Province of Ontario accounts for nearly 40% of the Canadian market during the first eight months of the calendar year; reflecting slight growth over 2015, when it accounted for 36.6% of the market for the full year in 2015.

According to the analysis, there are 9.4 million commercial vehicles (Classes 4-8) in operation on US roads, based on a snapshot taken in June of this year. One of the most important statistics about vehicles in operation is that only 22% of vehicles on the road are operated by fleet managers with more than 500 vehicles, as compared to 43% for new registrations. Once a vehicle goes through its initial purchase cycle, it moves from these large fleets to small- and mid-size fleets.

The Central and South regions of the United States (based on IHS Markit definitions) account for 30% and 28% of the vehicles in operation respectively. Nationally, the largest vehicle population is tractors at 34% of the vehicle population followed by straight trucks. Overall, Class 8 trucks account for 45% of the vehicle population nationally.

Another way to look at the vehicle population is by year model of the vehicle. The sweet spot for full vehicle overhaul is about five to six years and IHS Markit data indicate that there are less than 200,000 Classes 4-8 2010 model year vehicles in operation and less than about 100,000 units, on average, of 2008-2011 model year Class 8 units in the vehicle population. As a result, some repair services have indicated a low level of demand for Class 8 replacement parts.

One of the key decision factors of businesses considering new vehicle purchases is the age of the fleet as a whole. Nationally, the average age of commercial vehicles (Classes 4-8) on the road is 14 years, which is the highest it has been since IHS Markit began tracking this metric. Some of the oldest vehicles on the road are Class 6 straight trucks and all buses.

Based on these factors, IHS Markit analysts expect to see continued high demand for used commercial vehicles, and there will continue to be strong demand for replacement parts and service.