Daimler says truck market's recovery may take years

Daimler AG, the world's largest truckmaker, said worldwide demand for heavy vehicles may take years to return to pre-recession levels.

The western European market will bottom out in 2010 and post a "slight" increase for the full year, Andreas Renschler, head of the Daimler Trucks unit, said today. U.S. industrywide demand will rise by about 15 percent and Brazil, China and India will continue "stable" growth. The division's sales will be "clearly" less than the 472,100 trucks delivered in 2008.

"I would be happy to return to 2004 levels in two to three years," Renschler told journalists at a briefing near Daimler's headquarters in Stuttgart, Germany. The company sold 408,000 trucks in 2004 compared with 259,000 last year.

The global recession prompted freight companies to put off ordering vehicles. Deliveries of heavy-duty trucks plunged 44 percent in Europe in January, continuing a contraction that has persisted for 21 months, according to the European Automobile Manufacturers' Association.

Daimler Trucks makes Mercedes-Benz heavy vehicles in Europe, Freightliner models in the U.S. and Fuso trucks in Asia. The unit recorded an operating loss of 1 billion euros ($1.36 billion) in 2009 as sales fell 36 percent to 18.4 billion euros.

Plant Closures

The company initiated shutdowns of two commercial-vehicle plants each in North America and Asia in late 2008, and it scaled back truck production last year by 50 percent. Daimler Trucks will operate its German factories on reduced schedules until mid-2010.

The reorganization programs in North America and at Fuso are ahead of plan, Renschler said, adding that the pace of savings will accelerate. Daimler expects all truck units to report a profit this year, he said.

The company, which also makes Mercedes-Benz luxury cars, predicted last month that delivery growth in 2010 will lead to truck-division operating profit of about 200 million euros. That would amount to 9 percent of the group's earnings target of 2.3 billion euros. Daimler Trucks' orders jumped 58 percent from a year earlier in January and probably rose by at least the same rate in February, Renschler said.

Daimler plans to expand in China and India to maintain its position as the world's No. 1 manufacturer of heavy trucks. It narrowly held on to that rank last year as its global market share dropped to 11 percent from 15.2 percent.

China FAW Group Corp. overtook Gothenburg, Sweden-based Volvo AB to reach second place in global truck sales, with the Asian company's market share increasing to 10.5 percent from 7.1 percent against a decline at the Scandinavian manufacturer to 5 percent from 8.1 percent, according to Daimler data.

Chinese, Indian Plans

Daimler Trucks is seeking government approval to start a joint venture in China with Beiqi Foton Motor Co. It's also building a factory in India to compete with former partner Tata Motors Ltd. The plant is due to start production in 2012, and Daimler is searching for a sales partner, Renschler said. Daimler is also investing 460 million euros to expand production capacity in Brazil by 15 percent.

The German company intends to invest 2 billion euros on technology to reduce exhaust emissions in the next two years and on overhauling its model line-up through 2014, Renschler said.