Daimler Trucks Expects Brazil Crisis to Worsen Before Revival

[kscarbel2]

Bloomberg / September 11, 2015

Daimler AG said it expects demand for trucks and buses in Brazil to plunge as much as 50% this year as the crisis in South America’s largest economy gets worse.

The market in Brazil, struggling to overcome a crippling recession, will need one to three years to return to growth, Wolfgang Bernhard, head of Daimler’s commercial-vehicle unit, said at the Hamburg club of business journalists late Sept. 10.

“We expect to continue hibernating,” Bernhard said.

Industrywide truck sales plunged 44% in the first half of the year, the Stuttgart, Germany-based company said in August.

Brazil is one of several markets in which “there’s a strong, very cold headwind,” he said.

Brazilian bond and equity markets tumbled Sept. 10 after Standard & Poor’s cut the country’s credit rating to junk with a negative outlook. Daimler already has shrunk its Brazilian workforce by about 3,000 jobs under a two-year reorganization and in August announced reduced working hours at its local truck-making division.

The company will invest in new products in Brazil despite the downturn because it sees long-term potential in the country, Bernhard said. Daimler has been able to restore market share despite the crisis, becoming the country’s biggest seller of trucks again, he said.

“This may not be a sign of spring, but it shows that our team managed to cope with that difficult environment,” Bernhard said.

The company operates two truck- and bus-building plants in Brazil and is setting up a factory to start making passenger cars there next year. It employed about 12,000 people in the Latin American country at the end of 2014.

[kscarbel2]

Daimler trucks boss braces for prolonged Brazil slump

Reuters / September 11, 2015

German truckmaker Daimler is bracing for a prolonged slump in Brazil as shrinking growth in Latin America's largest economy and corruption probes weigh down business.

"I expect no fundamental recovery in the next years," Daimler trucks chief Wolfgang Bernhard said Thursday.

"The scandals are paralysing everything," he added, noting it may take as many as three years for the Brazilian trucks market to rebound.

An investigation into state-run oil company Petrobras has paralysed Brazil's construction industry and derailed some oil projects, inflicting damage on the country's embattled economy.

Stuttgart-based Daimler said last month it had struck a labour deal with workers at its Brazilian trucks plant in Sao Bernardo do Campo that delayed the planned layoff of 1,500 staff until August 2016.

Employees at the plant have agreed to cut both their working hours and their pay by 20 percent, with the Brazilian state ready to compensate workers for half of the pay reduction.

Separately, Bernhard said truck demand in China may plunge between 30 and 40 percent this year as the government there delays infrastructure projects.

But solid demand in the United States and Europe, where volume will likely grow as much as 15 percent each, will help Daimler compensate for any lost business, the executive said.

Daimler is planning to resume business in Iran following the country's nuclear deal with world powers, Bernhard said. The accord looks likely to be implemented after efforts by U.S. Republicans to kill the agreement collapsed on Thursday.

"We will revive our activities which we let rest for many years," he said. "Iran is a great opportunity for us."