Supply frictions, including new disruptions from the war in Ukraine, have turned the European truck market upside down. Lead times are exceptionally long, and truck registrations are expected to slide again in 2022. With orderbooks reaching far into next year, we expect a delayed recovery in 2023 despite mounting headwinds
Content
- European truck fleet lags transport volume growth
- Recovery of truck registrations still a long way off in biggest European markets, with the UK most behind
- Stretching the investment cycle ages the fleet
- Order intake slows with transport headwinds – pent-up demand still there
- Soaring raw material prices led to significant price hikes for new trucks
- New interruptions push back European truck production in 2022
- Strong orderbooks preludes production increase in 2023, even if intake slows
- Increase of new truck registrations in 2023 following higher production
- Mercedes still leads the European truck market
- Truck market could normalise in the run up to 2024 – supply threats remain
- How are Volvo Trucks, Daimler Truck and Paccar performing and what is their outlook?
European truck fleet lags transport volume growth
The European truck fleet has expanded less than transport volumes since 2015. Among the larger transport countries, Poland (+20%) and Romania (+45%) showed the highest growth in rolling stock between 2015 and 2021, following the shift of international transport towards Eastern Europe. This turned Poland into Europe’s market leader in international road transport, with 1.2 million registered trucks (> 3.5 tonnes), including those of many western European subsidiaries.
Total fleet growth slowed throughout the pandemic with companies detaining trucks due for replacement. This is expected to continue throughout 2022, and combined with a limited inflow of new trucks, could indicate tight truck capacity.
Truck fleet development lags transport demand
Development of truckpark vs. transport performance in ton/km (EU 27), index (2015 = 100)
Source: Eurostat, ACEA, ING Research
Recovery of truck registrations still a long way off in biggest European markets, with the UK most behind
Among the three biggest European markets, the largest initial drop in new truck registrations in 2020 was seen in the UK. Registrations have only shown a weak recovery thus far, still hovering at around a quarter below their 2019 level.
Truck registrations in the Netherlands remain more than a fifth down, and more than a third lower than pre-pandemic levels in Belgium. Remarkably, southern European countries (including Italy and Spain) recovered fairly well from low levels. However, new truck registrations have slumped in these countries since the financial crisis in 2009, leading to a relatively old installed base, so this recovery could be the result of a catch-up effect.
Replacement rates slowed due to the low inflow of new trucks
% rolling stock replaced by new trucks per year in the largest European truck markets
Source: ACEA, ING Research
Stretching the investment cycle ages the fleet
Low inflow and plunging replacement rates of new trucks also lead to resumed aging of the fleet in European countries. Road taxing figures for Europe’s largest economy, Germany, show the share of Euro VI-trucks in total motorway traffic reaching 90% in 2022. Despite the lowest fares for new trucks, the share of Euro VI could have been higher, with replacement rates remaining relatively low for the third consecutive year.
Share of Euro VI-kms on European motorways close to 90%
Share of the cleanest emission class Euro VI (first generation: 2013) in total kilometers on
German motorways
Source: BAG MAUT-statistik, ING Research
Order intake slows with transport headwinds – pent-up demand still there
Registrations were still a fifth lower in 2021 than pre-pandemic levels, as significantly higher prices combined with weakened growth perspectives and mounting uncertainty all contributed to a slowing order intake. Despite a long period of reduced deliveries for clients, this has not led to notable order cancellations. We believe that three years of underproduction and rebounded road transport volumes could also result in pent-up demand for replacements, which could signal a potential for the truck market to catch up in the coming years.
Fuel efficiency is an extra incentive to replace rolling stock. New models of Scania, Volvo, and DAF (the latter also makes use of the option to lengthen the tractive unit to improve aerodynamics) easily lead to a 10% fuel saving when replacing a seven-to-eight-year-old truck.
Source: It’s all about capacity in the truck market | Article | ING Think
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Transport sector Transport
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