Commercial Vehicle Forecast Cut for 2025

The global medium- and heavy-commercial vehicle (MHCV) market faces a significant downward revision for 2025, driven primarily by the ongoing impacts of tariffs and broader economic uncertainties. This update reflects a notable shift from our previous commercial vehicle forecast for the year.  

Our latest projections indicate a decline in global MHCV (>6T gross vehicle weight) sales by 1.4% in 2025 compared to 2024, with global truck sales alone – without buses - expected to decrease by 1.7%. This current expectation of a decline in MHCV demand contrasts with our earlier outlook, which had counted on a slight increase in 2025.

While regions such as Japan and South Korea may experience modest recovery in 2025 driven by replacement demand and infrastructure investments, the North American outlook has shifted from potential growth to a projected decline due to updated regulatory assumptions, economic slowdown and the adverse impacts of tariffs. 

The revised outlook now sees a 7% decline in North American new truck and bus sales for 2025, the second-largest forecast slide among any region following the sharpest downgrade. New truck registrations in the region are expected to decrease by 8% year-over-year in 2025. Class 8 trucks will see the most dramatic decline this year, with unit sales projected at just 270,000, a decrease of 12% year-over-year.

Several key factors have contributed to this adjustment:

• Tariffs: We estimate the cumulative potential impact of newly announced tariffs on MHCV prices to be in the 3-8% range. The effective tariff rate on US imports now exceeds our earlier expectations. However, the announced duties on complete built-up (CBU) MHCVs coming into the US are below our earlier assumptions.
  • USMCA-compliant products are exempt from the 25% duties on goods from Canada and Mexico, meaning that compliant MHCVs imported to the US from these countries will face zero duties. Previously, we had projected either a 10% universal duty or a worst-case 25% duty for Canadian and Mexican MHCVs. This provision may mean a slightly lower price impact than our previous worst-case scenario of 9-10%.
  • Conversely, MHCVs from the rest of the world are now subject to a consistent 10% duty, aligning with our earlier baseline, with potential to go higher.
  • More importantly, beyond the direct impact on vehicle prices, tariffs are expected to pinch overall economic growth. This in turn negatively affects key indicators that drive truck orders such as freight tonnage, on-road shipments, and freight rates.
• Economic slowdown: The broader economy has weakened, with real GDP growth forecasts for North America in 2025 and 2026 revised downward to 1.3% and 1.5%, respectively. A decline in freight demand due to economic uncertainties is expected to lead transport companies to postpone investments in new trucks. This caution is already reflected in declining new order intake rates for trucks.
• Regulatory changes: We expected updated US emissions standards set for 2027 (EPA2027) to drive pre-buys of EPA10-compliant trucks, but fleets appear to be responding more cautiously than anticipated. We have now reduced our modeled prebuy for the 2025–2026 period by roughly 50%.  
   
  This revision is based on a combination of growing uncertainty among fleet operators and weaker-than-expected Class 8 order activity over the past three months. Recent earnings calls from publicly-traded trucking companies also suggest continued overcapacity in the US trucking fleet, reinforcing the expectation of weaker purchases, all else equal, going forward.  
   
  In addition, signals from the new administration that it may revisit Biden-era greenhouse gas rules—while distinct from the EPA2027 NOx and particulate regulations—have introduced further doubt around the timeline and final form of EPA2027 implementation. Our updated assumption reflects both muted prebuy behavior and allowance for possible regulatory adjustment.

In summary, the substantial downgrade to North America’s commercial vehicle forecast is the result of a combination of factors, not solely tariffs. Tariffs and regulatory uncertainty are dampening business confidence, while overcapacity and weaker freight demand compound the downturn.  
 
Depending on geopolitical developments—including potential trade agreements with China or tariff rollbacks—there is some upside risk to 2025–2026 volumes. This regional performance is critical to the overall automotive industry forecast and reflects shifting global demand patterns.

In mainland China, the MHCV market is also under pressure from ongoing trade disputes and a slowing economy. Heavy and medium truck sales reached approximately 1.03 million units in 2024, reflecting a modest year-over-year increase of 1.1%. 

Our projections for 2025 indicate a decline of around 0.4% year-over-year, driven by trade tensions and weakening domestic demand. We expect the Chinese government to implement policy measures to mitigate the risk of a sharp economic slowdown, though decreased private sector confidence may undermine these efforts.

Additionally, the market in China is contending with a surplus in truck transport capacity, which pressures profitability and could further dampen MHCV sales. Nonetheless, the introduction scrapping and renewal subsidy policies aimed at high-emission, older vehicles is expected to partially offset market headwinds and the decline in sales of natural gas-powered heavy trucks.

In Europe, the MHCV market faces challenges due to high tariffs on exports to the US and sluggish economic growth. We have adjusted the annual real GDP growth forecasts for Western Europe downward to 0.7% for 2025 and 1.1% for 2026. Meanwhile, the GDP growth for Emerging Europe was cut to 2.7% and 3.0% respectively.  

The heavy commercial vehicle market in Western Europe shrank in 2024 due to weak demand, but anticipated pent-up demand and fleet replacement needs may provide some support for recovery.  In Central Europe, where a large proportion of heavy trucks sold are heavy tractor trucks, sales are expected to be weak due to low demand from Germany and other key trade partners this year.  

Meanwhile, in Eastern Europe, the trend is expected to be negative, primarily dragged down by the Russian market, where tighter regulations and stagnation in some sectors of the economy are taking their toll on heavy commercial vehicle demand. S&P Global Mobility’s new forecast for the region projects a year-over-year decline of 7% in 2025, or fewer than 570,000 MHCVs,  which is around 5% lower compared to our previous projections.

In India, the MHCV market demonstrated resilience, with a growth rate of 10.5% in 2023. The government's emphasis on infrastructure development, particularly in road and highway projects, is expected to bolster demand for medium- and heavy-duty trucks. Despite a decline in demand in 2024 amid uncertainties surrounding the general elections, we project the market will recover in 2025, driven by government infrastructure investments and improved financing conditions for micro, small, and medium enterprises.

Looking ahead, several risks and opportunities could significantly impact the MHCV market outlook. Chief among the risks is the potential escalation of trade tensions, which may trigger additional tariffs and further disrupt global supply chains. Uncertainties surrounding the enforcement of new emissions standards may also affect fleets’ purchasing decisions. We also continue to watch geopolitical issues closely, including the tensions between India and Pakistan, as we go to print.

On the opportunity side, continued government initiatives promoting zero-emission vehicles, along with large-scale infrastructure investments, are likely to shape both vehicle demand and product offerings in the coming years. These are closely tied to evolving automotive industry trends around sustainability and digitization.

Ultimately, the trajectory of the commercial vehicle market will depend on how global trade policies, regulatory developments, and technological innovations unfold over the coming months and years. To stay competitive amid shifting tariffs and economic headwinds, stakeholders must stay attuned to the commercial vehicle forecast and evolving regulatory landscape in the MHCV sector.