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Global Heavy Truck Sales Forecasts: Declines In APAC Offset Growth In U.S. And EMEA

Global sales of heavy-duty trucks will decline by up to 5% this year, dragged down by declining demand in China (see charts 1 and 2). Under our latest scenario, we forecast sales will decline by between 0%-5% in 2021 to about 2.34 million units due to negative demand in China. This compares to sales of 2.40 million units in 2020. For 2022, we expect sales volumes to fall further by between 0% and 5% (see table 1).

This overall decline masks large regional variations in growth expectations for the heavy-duty truck market. Contractions in APAC of 7.5%-12.5% will outweigh strong sales growth of 22.5%-27.5% in North America and 15%-20% in Europe.

Chart 1

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Chart 2

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Table 1

Global And Regional Heavy-Duty Sales Year-On-Year Changes
--Heavy-duty truck sales year-on-year changes (%)-- Units sold
2018* 2019* 2020* 2021f§ 2022f§ 2020**
Europe 1.6 (0.2) (22.3) 15-20 7.5-12.5 294,028
APAC 6.6 (5.7) 23.6 (7.5)-(12.5) (7.5)-(12.5) 1,793,940
North America 25.4 6.8 (30.7) 22.5-27.5 7.5-12.5 228,253
South America 33.3 17.6 (20.3) 17.5-22.5 12.5-17.5 69,073
Total 8.6 (2.4) 6.1 0-(5) 0-(5) 2,398,320
*Source LMC. §S&P Global Ratings forecasts. **Source LMC.

Global heavy-duty truck sales expanded by 61% in the first quarter of 2021 on the same period of 2020, owing to growth in all regions, according to data by the automotive industry forecaster LMC. This leap reflected the strong sales decline in China in Q1 2020, which was largely influenced by the COVID-19 pandemic.

We expect supply-chain constraints to reduce manufacturers' output in Q2 2021, but we believe that any lost sales could largely be recovered in the second half of the year or in 2022. However, given the lack of visibility on the global semiconductor shortage, our view of a second-half recovery may still change (for further details see "Global Semiconductor Shortages Could Chip Away At The Auto Sector's Recovery In 2021," published on Feb. 10, 2021, on Ratings Direct). All truck manufacturers we rate have reported that supply-chain issues will temporarily slow their production rates. Similarly to the light-vehicle sectors, the effects vary materially between individual companies. In our view, this is tied to differences in manufacturers' supply-chain structures. PACCAR reported its first-quarter 2021 sales were down by 7% due to semiconductor shortages but left its guidance for 2021 unchanged. TRATON, currently expects that it could slow down production for a few days and to catch up at a later point in the year. Daimler and CNHI are experiencing the same challenges but have not disclosed the effects on production and units sold. AB Volvo has planned a two-to-four-week production stop in the second quarter 2021.

Chart 3

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In the EU, we expect a recovery in economic growth to lift truck sales. We now expect real GDP to expand by 4.1% in 2021, after falling by 6.7% in 2020. For 2022, we forecast GDP will expand by 4.6%. This should increase heavy-duty truck sales by between 15%-20% this year and 7.5%-12.5% in 2022. We forecast heavy-duty truck sales in the eurozone will recover to 2019 levels by 2022, influenced not just by GDP growth, but also by average fleet age and regulatory actions, both encouraging new purchases.

In the U.S., we anticipate a more pronounced GDP recovery of 6.5% in 2021, after a 3.5% contraction in 2020. For 2022, we now expect real GDP to expand by 3.1%. This supports our forecast of growth of North American heavy-duty truck sales of 22.5%-27.5% in 2021 and 7.5%-12.5% in 2022. Nevertheless, we anticipate unit sales in 2022 will remain about 5% below the 2019 level.

For APAC, the forecast decline in heavy-duty truck sales this year results from high pre-buying activity ahead of the transition to stricter emissions regulations in the middle of 2021. For the APAC region, we expect GDP growth of 6.7% in 2021 and 4.7% in 2022. Nevertheless, we expect that GDP growth will have less of an impact on heavy-duty truck sales over the period. Given the high base sales in 2020, we forecast APAC heavy-duty truck sales will contract by 7.5%-12.5% in 2021 and 7.5%-12.5% in 2022.

We believe the challenging energy transition to zero-emission vehicles in the truck industry will continue to require costly research and development (R&D) and adjustments to manufacturers' business models. Services, including captive finance operations, are likely to increase in importance relative to sales. We expect manufacturers' increased R&D efforts could potentially result in margin pressures. In some cases, we see signs of cost externalization through R&D partnerships and joint ventures (JV), such as cellcentric, between AB Volvo and Daimler Trucks launched in recent months to develop fuel cells. Volvo paid Daimler about €600 million for a 50% stake in cellcentric.

We believe the evolution of zero-emissions trucks in the market will largely depend on countries' regulatory frameworks, as well as energy costs for electricity and diesel. This is because energy accounts for about 45% of total operating costs for heavy-duty trucks with a standard use pattern. This implies that there will be an uneven penetration of zero-emission trucks across several countries. Given the higher costs of electric vehicles, range limitations, as well as the lack of charging infrastructure today, we think volumes for zero-emission trucks will increase only gradually, and initially mainly for local and regional use cases. A material increase of battery electric vehicles (BEV) sales may only arise once the total cost of ownership for BEV at least equals that for diesel. But in 2021 and 2022, volumes of BEV units sold compared with the total will be marginal.

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Marta Bevilacqua, Milan + (39)0272111298;
marta.bevilacqua@spglobal.com
Secondary Contacts:Ben Tsocanos, New York + 1 (212) 438 5014;
ben.tsocanos@spglobal.com
Chloe Wang, Hong Kong + 852-25333548;
chloe.wang@spglobal.com
Research Contributor:Ray Satagaj, Stockholm + 46 84 40 5908;
ray.satagaj@spglobal.com

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