Europe’s truckmakers glimpse signs of recovery

[kscarbel]

The Financial Times / July 24, 2013

Heavy truckmakers are seeing signs of improvement in Europe as new models and tough new emission regulations encourage customers to bring forward purchases in spite of a still weak economy, results from Daimler and Volvo show.

Truck sales fell in Europe and the US in the latter half of last year amid worries over Europe’s debt crisis and cuts in US public spending. Now there are signs that truck markets on both sides of the Atlantic are on the mend, although growth remains tepid at best.

Economists view trucks as a useful barometer of global business confidence but national truck markets remain highly differentiated, in part because of differing emissions regulations.

“In Europe, the US and South America we see a certain stabilization,” Volvo Group chief executive Olof Persson, said, “with the caveat that changes can come very rapidly.”

Last week Volkswagen-owned Scania said order bookings in Europe continued to improve during its second quarter and it would increase its daily production rate. “The economic climate remains uncertain but there is a replacement need,” said Martin Lundtstedt, Scania’s chief executive.

Following a weak start to the year, Volvo’s sales and profitability bounced back in the second quarter and total truck deliveries climbed 35 per cent to almost 52,000 quarter on quarter, it announced on Wednesday.

Volvo’s new truck orders increased 39 per cent in North America compared with the second quarter last year, while European orders rose 13 per cent over the same period.

European truckmakers are launching new models ahead of the forthcoming 2014 Euro-6 emissions rules.

“Despite the unfavorable economic climate in parts of Europe, the high order intake over the past six months indicates that some customers are choosing to renew their truck fleets ahead of the new emissions legislation,” Volvo said.

Daimler’s total second-quarter truck unit sales were 1 per cent higher than a year ago, it announced on Wednesday, but earnings before interest and tax at its trucks unit fell 17 per cent to €434m compared with the same quarter a year ago, because of foreign currency headwinds and the still weak level of demand.

Daimler’s western European and North American truck orders also increased compared with the same quarter a year ago. The Stuttgart-based group expects truck sales in Europe to rise as the year progresses and it sees a stabilization in North America.