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Truck Fleet Profitability Forecast to be High in 2018

Kenny Vieth, president and senior analyst for ACT Research, recently said at the 53rd ACT Research Seminar that there "has been a positive alignment of various factors that drive truck demand."

This is good news for truck fleets and profitability through the end of the year and into 2018. Publicly traded truckload carriers saw 6-6.5% profit levels compared to 4-4.5% seen from 2010 to 2013.

"When fleets are making money they prefer to buy trucks rather than pay taxes on the money they make," Vieth said. Profits may be down in September, however, as overnight provisions have changed.

Dealer inventory is also up some 8500 units when compared to this time last year. Vieth added, "dealers are sitting on a boatload of inventory."

After a hot start in 2015, Vieth uses the recent quiet spell as proof that the end of 2015 will be near neutral. Floor traffic at dealerships is still high, he reports, so there is still interest in trucks.

He believes that 2018 will be another good year in terms of fleet profitability but expected some softening in the market by the second half. The strong U.S. dollar and weak world economy will keep overall growth spotty, he believes.

One "fly-in-the-ointment" is the proposed Greenhouse Gas Phase 2 Standards -- the cost of this technology will influence whether or not there is a significant pre-buy prior to the standards taking affect.

A cost increase of $10-20k dollars will cause a "significant market disruption" according to Vieth, leading to an uptick in buying in 2019 and 2020.