Scotiabank Economics forecasts 20 percent drop in heavy truck sales due to virus headwinds

Many consider trucking as the lifeblood of an economy.

They say that if trucks aren’t moving, nothing is happening.

Like vast swaths of the economy, the Canadian heavy trucking industry feels the impact of the COVID-19 pandemic.

Scotiabank Economics noted in a report Wednesday (August 26) that sales of commercial trucks fell 55 percent year-over-year in April 2020.

Year-to-date sales of heavy trucks stood at negative 26 percent as of the release of the report titled ‘Heavy Truck Sales in Canada Amidst a Pandemic’.

Rebekah Young, director of fiscal and provincial economics, authored the document.

According to Young, sales of heavy trucks may decline 20 percent this year.

However, a 15 percent recovery could happen in 2021.

Young predicts around 42,000 commercial trucks will be sold by the end of this year.

“There is considerable uncertainty ahead, but an economic recovery is underway and the outlook for heavy truck sales in Canada should continue to improve,” Young wrote.

The Scotiabank economist described heavy trucks as a “highly cyclical business”.

The industry “suffered dramatic declines of similar magnitude in the past”, most recently the global financial crisis more than a decade ago.

Young recalled that because of the said crisis, annual sales of heavy trucks in Canada fell 40 percent in 2009 at the peak of the crisis.

Following a slowdown in April, there was an “acceleration in heavy truck orders in May and June”.

“A stronger-than-anticipated economic rebound in Canada is supporting the nascent recovery in truck sales,” Young wrote.

According to Young, “economic indicators across the board are signalling a robust rebound in Canada”.

“This is due in part to earlier-than-anticipated re-openings, pent-up demand working through the system, as well as exceptional policy supports,” Young wrote.

All said, Young noted the existence of a “bulk of uncertainty” within the next six to 12 months that could negative impact heavy truck sales.

These include “virus resurgences, tariff risks, and US election uncertainty”.