CLEAR International has upgraded the picture for the West European trailer market to reflect a distinct improvement in the outlook for most, if not all, West European economies since the last report in May.
Instead of demand dropping by approximately 9% in 2018, a decline in demand of 5% is now forecast, followed by a further drop in 2019, leading to a total shrinking of the market by 13% over the two years.
For 2017, the demand for trailers increased in the first half of the year but will have close to zero growth in the second half. Overall, 2017 will see a 3% increase in registrations.
Given that the economic outlook or Europe continues to improve, why is the trailer market forecast down in 2018-19? The catchup demand that has been pushing the 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 nine years since the decimation of the trailer market in 2009 and the market has never gone ten years without a slowdown. All these factors point to a fall in demand for new trailers. Fortunately for the industry, the fall will be relatively modest and short-lived.
Following the decline in demand in 2018-19, there will be a return to growth in trailer sales in 2020-21. Furthermore, as we move into the 2020s, it is likely that demand for commercial vehicles will follow an upward path so that by mid-decade, we will be approaching levels above those of 2017.
The outcome of these changes is that 17,000 trailers have been added to the West European Forecast during the 2017-21 period, with over half of that total boosting the 2018 figure. Most of these extra trailers added to the forecast will be sold in Denmark, Germany, France, the Netherlands and Belgium, with Spain and the UK performing less well than expected in 2017.
The UK market is currently receding from the heady level of trailer demand seen in 2015-16 and as a result will have the unique distinction of shrinking every year from 2016 to 2019. Despite this trend, the UK market will fall below 20,000 trailers only in 2019, and therefore remains above the typical market level before the GFC.
The Brexit effect, which has already dropped the UK average investment growth forecast below 1% for the 2016-18 period, will result in uncertainty and low business confidence during the run up to the UK leaving the EU in 2019. However when (if) the Brexit terms have been settled, there will be a resumption of trailer market growth.