This will be a challenging year for the aftermarket economy, but the signals so far are positive for Canada. The forecast was unveiled hours before U.S. President Donald Trump said he planned to impose 25% tariffs on Canada on Feb. 1.
Although both Class 8 and trailer retail sales were down by 8% in 2024, Classes 6/7 sales rose 9% in 2024. Class 8 trucks and trailer sales are expected to rebound in 2025, according to Dave Kalvelage, client consultant and senior market analyst, MacKay & Company.
“The key for Canada is they’ve been hovering around their 10-year average,” Kalvelage said during a presentation at Heavy Duty Aftermarket Dialogue in Grapevine, Texas.
In the U.S. in 2024, Class 8 truck retail sales were down 10% while trailers sunk 30%. Classes 6 and 7 sales inched up by 1%. Kalvelage expected a bit of a rebound in 2025 for both Class 8 vehicles and trailers.
For vehicle operating populations in 2024, Canada had 376,000 Class 8 trucks, 188,000 Classes 6/7 vehicles and 585,000 trailers. Over the next five years, the Class 8 truck population is expected to grow 3.9% to 391,000, and trailers will also be up 3.9%, rising to 608,000. Kalvelage forecast Classes 6/7 to increase by 2.4% to 192,000.
Vehicle utilization to stay flat
Last year in the U.S., there were 3.8 million Class 8 trucks, close to 2.2 million Classes 6/7 vehicles and almost 5 million trailers in operation. The Class 8 segment will grow in the next five years, soaring by almost 9% to 4.1 million vehicles. Classes 6/7 will rise marginally by 1.6% and trailers will climb 4.6% to 5.2 million units.
Kalvelage noted utilization of vehicles was down a bit in 2024 and expected to stay flat in 2025. He also observed that historically pricing increase has typically been in the 2% to 3% range, except during the pandemic where it spiked over 10%.
He forecast a 2.5% hike in 2025, and models show it will sit in the 2% range over the next five years, in line with historical levels.
Focusing on the trucking economy, the employment situation has been flat for the past three years, noted Dr. Bob Dieli, economist, MacKay & Company. “Typically, when you’re not hiring it’s because you’re not moving freight,” he said.
He observed that fuel prices were soft. Pointing out that when freight is not being hauled, fuel is not bought, and prices tend to go down.
Recession risk
Dieli said that tariffs have the same effect as taxes. The targets of the tariffs will retaliate and there will be collateral damage.
MacKay & Company uses truckable economic activity or TEA to measure all types of economic activity that move by truck; from consumer goods to construction activity to imports and exports.
Dieli observed that TEA is in a debit divot and the risk of recession lurks. Also, the longer it takes for interest rates to fall, the smaller the odds of a soft landing.
The economist said that with investment exports and imports under immediate threat, sustaining the current pace of GDP growth would be difficult.
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