Heavy trailer sales outlook improves in Western Europe, but still down >9% in 2023

The war in Ukraine and the cost of energy plus general price inflation have replaced covid-19 as the principal threats to growth in trailer demand. Inflation rose to 10 per cent but is now moderating. Interest rates however are still relatively high but not increasing. That’s the view of analysts at Clear International who have published their first report on the Western Europe heavy trailer market since May 2022.

Economic forecasts for countries in Western Europe have now slightly improved for 2023/2024, they continued, adding: “As a result, the forecasts for trailer demand in 2023 and subsequent years have improved, but again, only slightly.” In their view, West European trailer demand remains somewhat insulated from the impact of the war in Ukraine compared to countries that are geographically close to the conflict.

Increased costs caused by high inflation and interest rates, combined with some continued problems with sourcing vehicle parts are making profitable manufacturing difficult. A European war, conflict in the Middle East plus a difficult economic situation cannot help but dent business confidence and reduce companies’ willingness to invest in new transport equipment.

Clear International envisages a 9.6 per cent fall in trailer demand in 2023. Subsequent growth in the forecast period will bring the sales level close to that of 2022 by 2025. The 2024-2025 period is expected to be more positive in terms of both the West European economy and trailer registration growth. In fact, Clear believes that most published economic forecasts for 2024 are excessively pessimistic, with a stronger bounce back from very low 2023 GDP growth likely.

Things are more positive closer to home. During 2023, the trailer market outlook for the UK, Italy and the Netherlands has improved based on the demand to September, whereas Denmark and Finland look weaker.

Gary Beecroft, managing director of CLEAR International commented: “Trailer market sales for 2023 will be in line with the forecast published in February. There will be some sales growth in both 2024 and 2025.”

Continued turmoil in Eastern Europe, strong trailer demand in Turkey

In April Clear published analysis of developments in Eastern European markets. After weak trailer demand in 2020 caused by Covid-19, there was a 42 per cent increase in trailer registrations in the East European region in 2021, helped by huge growth in Poland and Turkey in particular. In percentage terms, growth in 2021 varied from 6.0 per cent in Russia to 112 per cent in Lithuania and therefore positive in every country.

2022 saw a 4.1 per cent fall in trailer demand in the region as a result of substantial falls in demand within the countries most affected by the war in Ukraine, which included Russia and Belarus. Poland also had a large fall in demand but that was due to having record demand for trailers in 2021, which took sales to an “unsustainable” level.

In 2023 a further of 13 per cent decline in the region is forecast due to the continuing war in Ukraine, the energy crisis, inflation, sanctions and of course a lack of business confidence which will delay investment in transport equipment.

Turkey, on the other hand, witnessed a 38 per cent increase in trailer demand in 2022. The reason was that, with inflation running at 70 per cent, companies with cash in the bank would rather spend it on assets which will retain some value rather than watch it depreciate in value. Furthermore, Turkey had relatively low demand for trucks and trailers in 2016-20, so a large amount of catch-up demand had accumulated.

Trailer sales in 2018 were the third highest on record, only surpassed in 2007 and 2008. The forecast now is that registrations of new trailers will exceed the 2007 level in 2027 having surpassed the 2018 level in 2021.

The prognosis for the 2023-2027 period has been upgraded in every year, in particular within Turkey, Czechia and Bulgaria.

Russia, the largest trailer market in Eastern Europe until 2010, suffered a 50 per cent fall in demand between 2011 and 2015, largely as a consequence of the annexation of Crimea, but had an astonishing recovery in 2017/18 and was the largest market once again in 2019-20. Turkish demand reached a new low in 2019, but recovery is already well established, and it will remain roughly on the same level as Poland until the end of the forecast period.

Whereas the demand for road transport (measured in tonne-km) in Western Europe has yet to recover to the levels that were typical before the 2009 recession, in Eastern Europe, both domestic and international road transport demand has continued to grow every year. Every year that is until 2018 when growth stalled.

Slowdowns in Bulgaria, Czechia, Estonia, Poland and Hungary were enough to halt the growth which had been continuous since 2000. There was some 5.6 per cent growth in demand in 2019 but this was mostly due to international activity in Poland and Lithuania. There was further growth of 3.2 per cent and 8.0 per cent in 2020 and 2021 respectively, and 2.3 per cent growth is estimated for 2020. Effectively the demand for transport has transferred from Western to Eastern Europe.

“The Russian intervention in Ukraine will result in its trailer market falling back to the levels last seen after the occupation of Crimea in 2014,” said Clear International managing director, Gary Beecroft, adding back in April:

“The sanctions imposed on Russia (again) are having a real effect. In contrast Poland, Turkey and Lithuania will have strong markets in the post-covid forecast period.”

Many East European countries joined the EU in 2004-07, which resulted in booming demand for trailers. In particular, semi-trailer demand rocketed as the volume of international road transport increased, both within Eastern Europe and between the East and the West. From 2002 to 2007 the compound annual growth rate for trailer demand was 25.7 per cent. Demand for trailers broke the 100,000-unit barrier in 2007 but fell to 40,000 in 2009 as a result of the GFC.