Commercial vehicle sales are improving as supply chain disruptions ease and electric vehicle purchases continue to grow.
Sales of commercial vehicles grew while registrations were steady in December 2022, according to the National Truck Equipment Association’s 2023 spring commercial vehicle market report. Improving sales indicates that the industry is beginning to overcome supply challenges that have defined the past few years, Kevin Koester, NTEA managing director, told Equipment Finance News.
“The simple answer is the health of the industry is improving,” he said. “The last few years have been challenging for companies to obtain materials and equipment at any level of the production process.”
Chip and chassis shortages contributed to supply chain issues that slowed production of commercial vehicles, Koester said.
“Chip and chassis shortages, and general supply chain disruption, have limited the industry’s ability to meet the demands of end-user fleets,” he said. “New and used inventory was in very short supply, causing fleet managers to have to spend excessive time searching for the required chassis, often with no suitable result.”
Supply chain issues had a more significant impact on the commercial vehicle market than rising interest rates, Steve Latin-Kasper, NTEA senior director of market data and research, told EFN.
“The rise in interest rates has had minimal impact on commercial vehicle sales,” Latin-Kasper said. “Chassis availability and a tight labor market have been far more influential.”
Commercial EVs see growth
Commercial electric vehicles (EVs) spiked to nearly 11,000 registrations in the second half of 2022, according to NTEA’s report. While the increase was an improvement from the nearly 2,000 EV registrations through June 2022, EVs remain a small portion of the overall market, Koester said.
“It’s important to note that while a lot of companies have said they will be producing and selling electric commercial vehicles, the rubber has not met the road for the vast majority,” he said. “Few companies that stated intent in recent years have seen vehicles registered to commercial users.”
Most of the growth in the commercial EV market came in the Class 2 segment, which comprises units with a gross vehicle weight rating between 6,001 pounds and 10,000 pounds, according to the market report.
“While we are starting to see numbers increase for EVs in Class 2, they are still a very small percentage of the segment in total,” Koester said. “Those vehicles are going to be the first impression a lot of the industry will get with electric vehicles and will need to prove they are work-worthy to continue to grow.”
Future of commercial vehicles
In conjunction with electrification, new emissions regulations going into effect from the Environmental Protection Agency and the California Air Resources Board are likely to change the commercial vehicle industry. One result might be a decision to order ahead for compliant vehicles, Koester said.
“The coming years will bring new regulations in terms of emissions that could create a pre-buy situation for fleets wanting to purchase vehicles ahead of those challenges,” he said. “At the same time, fleets have invested significant effort into improving and maximizing their operational efficiency and redeploying vehicles within their fleets to eliminate waste.”
Regardless of the specific catalyst, fleet managers will likely purchase newer commercial vehicles, contributing to a continued decline in average fleet age, Koester said.
“Even the proliferation of electric commercial vehicles will have an impact on fleet age,” he said. “Factoring in all of the above, I expect there will be a lot of new commercial vehicles hitting the road in the coming years with fleets purchasing vehicles as quickly as the chassis OEMs can produce them.”