Morgan Stanley Forecasts Improving Freight Conditions and Emissions Regulations to Boost Global Truck Makers
Morgan Stanley expects a rise in global truck sales in 2025, driven by improving freight conditions and upcoming emissions regulations. The brokerage has identified five key trends for the sector, including complexity in the truck cycle and the potentially supportive EPA 2027 pre-buy. The company’s top picks for the sector are Daimler Truck Holding AG and Volvo AB ser. B.
Daimler Truck, with a “overweight” rating and a price target of €48, is expected to benefit from its significant North American exposure, low valuation, and shareholder return strategy. However, potential US-Mexico tariffs pose a risk. Volvo, on the other hand, is favored due to its balanced geographic exposure, 100% US truck production, and potential benefits from emissions regulations. Morgan Stanley has upgraded Volvo to “overweight” with a target of SEK323, implying an upside of 14%.
Other heavy-duty truck original equipment manufacturers (OEMs), including Traton and Iveco, are also expected to gain. Iveco’s improving free cash flow could drive upside, particularly in its Q4 results on February 7. The brokerage sees the tariff outcome as a critical catalyst for investor decisions, with Daimler preferred in a status quo scenario and Volvo favored if tariffs are imposed.