Traton CEO on possible EPA27 delay: 'This is not making any sense'
Key takeaways:
- Uncertainty surrounding the EPA's 2027 emissions regulations may lead to delays and discourage carriers from making purchases, according to Traton SE CEO Christian Levin.
- Traton reported an 8% drop in truck sales and a 6% decline in revenue in the first half of the year, prompting a revised sales outlook for 2025 that hints at a potential decline.
- Following the Q2 report, Traton’s shares fell about 4%, although they have increased approximately 11% over the past six months, indicating mixed investor sentiment.
Traton SE CEO Christian Levin says the ongoing lack of clarity around the Environmental Protection Agency’s 2027 emissions regulations is making it more likely that the rules will be delayed, adding an uncertain market also being tested by tariffs and a shaky industrial economy.
Speaking July 25 after Traton, the parent of the International and Scania truck brands, reported its second-quarter results, Levin said the fog around EPA27’s details and implementations—which has helped turn what was expected to be a big prebuy season into carriers sitting on their hands—is causing “a lot of insecurity and actually frustration” for original equipment manufacturers, their dealers and their customers.
“We do not yet really know towards what level of NOx we need to type-approve our engines,” Levin said. “That’s why I say it’s highly unlikely that there will be any prebuy this year and why there could be a delay of the introduction because this is not making any sense.”
EPA officials in March of 2024 announced a final rule—based on work that originated during President Donald Trump’s first term—setting more stringent emissions standards for light-duty and medium-duty vehicles starting with the 2027 model year. But some of its details haven’t yet been confirmed, which led Levin to tell analysts that “the expected prebuy will certainly not happen this year. I think we can completely rule that out.”
In a statement to FleetOwner, EPA officials pointed to Administrator Lee Zeldin’s announcement in mid-March that he would reconsider several other heavy-duty emissions standards for the 2027 model year.
“Additionally, EPA is re-evaluating the other parts of the Biden EPA’s problematic ’Clean Trucks Plan,’” officials said. “This includes the 2022 Heavy-Duty Nitrous Oxide (NOx) rule, which results in significant costs that will make the products our trucks deliver, like food and other household goods, more expensive.”
See also: Fleets Explained: Emissions regulations
Officials did not respond to a question about the possibility that the 2027 rule’s implementation will be delayed. As of July 28, the agency’s landing page for the rule hadn’t been updated since March 12, the day Zeldin said he’d re-examine emissions rules as well as the EPA’s authority to regulate greenhouse gas emissions more generally.
Levin acknowledged on Traton’s conference call that his team is “perhaps a little bit more balanced or careful in our outlook” than most of his OEM peers. One of those, Paccar CEO Preston Feight, had said a few days earlier that his team expects clarity on 2027 emissions rules soon and thinks that will drive buying activity.
“The greenhouse gas component for 2027 is likely not to change. That’s what a lot of people can understand now, which means there will be no further GHG requirements,” Feight said. “However, the law is in 2027 that the standard of NOx will move from 200 milligrams down to 35 milligrams. And if it moves from 200 milligrams to 35 milligrams, that will bring on cost to the product, which will encourage customers to be buying trucks probably beginning later in this year.”
Traton’s Q2 numbers and lower outlook
In the first half of the year, Traton sold about 121,300 trucks around the world, which was 8% less than in the same period of 2024. The company’s revenue slipped 6% to roughly $25.7 billion while its operating profit fell 40% to nearly $1.5 billion.
In the U.S. and Canada, Traton sold 25,725 trucks in the first half, which was down 6% year over year. The International group also saw revenues slip 6% to about $5.1 billion, but its adjusted operating profits fell by a third to a little more than $140 million as customers bought more lower-priced models and service revenues fell. The division’s book-to-bill ratio fell to 0.62 from 0.78 in the first half of 2024.
Those figures contributed to Levin and his team lowering their sales outlook for 2025 to a range of flat to down 10% from the previous up 5% to down 5%. In terms of unit sales, they now expect the U.S., Canadian, and Mexican markets to be about 275,000 trucks combined, down slightly from 280,000 three months ago.
Shares of Traton (Ticker: TRATF) fell about 4% on the heels of executives’ report and conference call. Over the past six months, however, they have been up about 11%.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.