West European trailer demand could fall 10%

West European trailer demand has not only faltered, but could fall by as much as 10 per cent, according to the latest analysis by Clear International. And, of course, if trailer demand is set to fall by as much as 10 per cent, this trend will no-doubt bring truck tyre OE sales down with it.

Since the last report was published in March, several West European economies have had their forecasts for 2019/20 economic growth downgraded yet again. As a consequence, the forecast of a slowdown in demand for trailers in the region during 2019 is likely to prove correct. In the first five months trailer demand has fallen by an estimated 2 per cent and a 10 per cent fall is forecast for the year.

Several large West European countries did see some growth in the first quarter of 2019, e.g. Belgium, France, Germany, the Netherlands and the UK. With the exception of France the amount of growth was quite small and is expected to turn into a reduction of trailer demand in the second quarter. Spain, Italy, Austria and Denmark all had falls in trailer demand in Q1.

Clear has forecast a cyclical slowdown (but not a recession) in European economies for some years. The catch-up demand that has been pushing the trailer market is now over. The trailer parc is fully replenished despite the fact that road transport demand has yet to return to 2006 (pre-GFC) levels. Furthermore, it is ten years since the decimation of the trailer market in 2009 and the market has never gone ten years without a slowdown.

In addition, trailer demand reached a very high level in 2018, rivalled only by 2007 which had an unnaturally high level of trailer sales largely brought on by the number of countries that joined the EU in 2004-07. All these factors point to a fall in demand for new trailers in 2019. Fortunately for the industry, the fall will be relatively modest and short-lived.

However, there is not reason to panic. From 2017-21 trailer registrations are forecast to be higher than any five-year period in history, even though that will include 2019 when demand is forecast weaker. The previous record-breaking five-year period was from 2004 08.

Production of trailers was at the second highest level on record in 2018 (though well short of the 2007 figure). The industry is therefore achieving both high levels of output and relative stability in what is traditionally a volatile sector of the vehicle market.

The trailer parc (fleet size) will set a new record level every year to 2023 – another reason why increased demand for new trailers is unlikely in 2019. And therefore, while trailer demand is likely to fall by as much as 10 per cent and this is likely to have a commensurate effect on OE truck trailer tyre demand, in practice volumes will remain healthy when taken in a long-term context.