What North American Class 8 Truck Sales Forecast Means For Bharat Forge To MM Forgings
Pre-buying is a key monitorable and companies with exposure to U.S. will use the push to drive earnings.
Rising sales and pre-buying of class 8 trucks in North America could be a turning point for Indian forging companies in fiscal 2025.
ACT Research revised its 2024 North American class 8 truck sales forecast to a decline of 9.6% from the 14.5% contraction it estimated earlier. However, for 2025 and 2026, the publisher of commercial vehicles and bus industry data across North America and China estimates sales growth of 6.7% and 8%, respectively, based on a report by Morgan Stanley.
Why Is This Important?
The North American class 8 truck market is key for Indian forging players like Bharat Forge Ltd., Samvardhana Motherson International Ltd., and MM Forgings Ltd. It accounts for 16% of Bharat Forge's standalone and 7% of Samvardhana Motherson's consolidated FY24 top line, according to the Morgan Stanley report.
MM Forging has noticed a change in demand, with active interest coming from North American customers, Managing Director Vidyashankar Krishnan told NDTV Profit. The discussion with customers is translating into schedules that would result in a stronger 15% growth for the company in calendar year 2024, he said.
The global economy is in a state of flux, but Europe and the U.S., which account for 35% of the company's sales, have picked up, Krishnan said.
Pre-Buying Before New Emission Norms
Pre-buying and fleet positioning ahead of the implementation of the EPA's 'Clean Trucks Plan' are happening, ACT Research said. The new emission standard for light and medium-duty vehicles, expected to be phased in by 2027 and 2032, will lead to pre-buying from 2024 until 2026, it said.
Krishnan of MM Forging concurs. The growth forecast for 2024, he said, would have a positive impact on Indian suppliers, including MM Forging.
Pre-buying would lead to sales of 10 lakh vehicles between 2024 and 2026, according to Bharat Forge Deputy Managing Director Amit Kalyani. For the US, pre-buying is positive, while it would be slightly lower for Europe, leading to an overall flattish trend, he said.
he company expects 10% growth in Q4 FY24 and FY25, Kalyani said in an interview to NDTV Profit. This is lower than the 15–35% growth seen in the first three quarters of the current fiscal.
