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August Class 8 sales sign of recovery or a mirage?

LAS VEGAS, Nev. -- Class 8 truck manufacturers, battered like never before by the worst global economic malais...


LAS VEGAS, Nev. — Class 8 truck manufacturers, battered like never before by the worst global economic malaise since the Great Depression, just may be starting to see a glimmer of light at the end of tunnel, according to Andreas Renschler, head of Daimler Trucks.

 

Then again, it may be a mirage.

 

Here’s what’s going on that has Renschler being very cautiously optimistic. August showed an uptick according to worldwide sales figures for his company that he presented in conjunction with the annual American Trucking Associations conference in Las Vegas.

 

Specifically, Daimler truck sales in the NAFTA region showed a 9% increase versus July. Sales were also relatively strong in the European Union and in Brazil August proved to be the best sales month of 2009 so far. In Asia August was the second best month of the year.

 

Welcomed news in a year where the truck market imploded worldwide but for North America at least it may be a mirage. The upturn in Class 8 sales may simply be reflective of the weak pre-buy before the 2010 engine emissions deadline. Renschler acknowledged that if that’s the case, the final quarter of the year could prove very slow.

 

Both Renschler and Martin Daum, the new president and CEO of Daimler’s operation in North America, believe the North American market will improve in 2010 but it won’t be much to get excited about. They are basically banking on a 10% improvement in sales over the horrible year that was 2009.

 

“We see very, very moderate growth, based on a U-shaped economic recovery that will climb slowly. It will certainly not be V-shaped. If had three wishes, that would be one of them but we are not living in a fairy tale,” Daum said.

 

The past year has certainly proven a nightmare ending to the fairytale growth in Class 8 sales shown during the decade. As Renschler pointed out this is the first time all regions his company is involved in have experienced sizeable drops at the same time. And those drops are significant. So far sales in North America for Daimler products are down 45% compared to 2008, which was not a particularly strong year in itself. In Europe sales are down 46%, in Asia 51%. Overall, Daimler Trucks sales worldwide are down 48%.

 

“The current market situation is not a walk in the park even for us, the market leader,” Renschler acknowledged in the understatement of the month.”The markets will not return to previous sales levels in the near future and there is a lot of pressure on pricing. But we have no intention to enter the discount race and we are flexible enough to last this out…Cash flow is the name of this game and we are still in a positive position.”

 

Daimler has taken decisive steps to manage the situation. For example, manpower levels in the NAFTA region were almost halved between December 2006 and June of this year. In fact, in August they were able to slightly add to their workforce. Also in April, everyone from the president on down took a 10% pay cut. Renschler believes growth in the near future will come from the emerging markets and Daimler is positioning itself to be a bigger player in these areas. Daimler is in a strong position in Brazil, having been there for 55 years, but is looking at partnerships in other countries.

 

Daimler is cooperating with the heavy-duty market leader in Russia to enter the local volume market and recently announced a common project between Kamaz, MFTBC and JV for production and sales of Fuso trucks in Russia. Daimler is also planning to enter the volume truck segment in India, starting in the construction sector. It’s also looking to make moves in the Chinese market place.


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