Global Truck Barometer Jul~24： Navigating through a gloomy outlook

Investment Rating - The report maintains a cautious outlook on the truck industry, with specific recommendations to prefer companies positioned for a truck downcycle, such as Knorr-Bremse and Traton, while advising a sell on Volvo due to its exposure to the deteriorating truck cycle [1]. Core Insights - The North American truck market shows a significant decline, with a net score of -8 in July, indicating a deeper deterioration in market conditions compared to previous months [1][14]. - In Europe, the net score improved to +2 in July, marking the first positive score in a year, although sustained momentum is necessary for optimism [1][73]. - The report highlights that while North America faces challenges with high inventory levels and declining orders, Europe is experiencing a slight recovery in carrier metrics, albeit from a low base [1][14][73]. North America Overview - The preliminary truck net orders in North America decreased by 3.7% month-over-month in July to 17.5k, down 13% year-over-year [1][42]. - Inventory levels are at near all-time highs, driven by macroeconomic factors and the upcoming US election, which is affecting orders [1][49]. - The backlog to build ratio has narrowed to 4.5 months, the lowest level since 2017, indicating potential production slowdowns [1][42]. Europe Overview - The European truck market's net score of +2 reflects an improvement from June, with carrier confidence showing positive signs for the first time since July 2022 [1][73]. - Despite a year-over-year decline of 8% in truck orders, registrations in the EU and UK increased by approximately 9% [1][73]. - The report suggests that production levels in Europe are expected to slow in the second half of 2024 compared to the first half due to normalized supply chains [1][73]. Market Dynamics - The report notes that the truck crowding scores have deteriorated across the industry, with specific brands like Knorr-Bremse remaining positive compared to peers [1][3]. - The overall sentiment in the North American market is cautious, with macro indicators and truck rates contributing to the negative outlook [1][14]. - The report emphasizes the importance of monitoring leading indicators, which have historically correlated with truck order developments [1][13][72].