Not surprisingly, truck OEMs are reporting bullish earnings for the quarter ending Sept. 30, due to a strong business environment for trucking as fleets pre-buy trucks to avoid the costlier emissions reduction technologies required to meet EPA standards that will apply to ’07 models.
Volvo Group—parent company of Volvo, Mack and Renault brands—said that while it anticipates a decline of “as much as 40% during the first half of [2007],” it also expects a significant rebound in the second half.
In 3Q 2006, Volvo Group delivered 17,248 trucks to the North American market—a 9% boost over 3Q 2005. Its net truck sales in North America for 3Q 2006 were 12.5- billion Swedish krona, which was a 7% increase over the same period last year.
“As a result of the large pre-buy of trucks with the old engines in North America during 2006, we expect sharply lower demand during the first half of 2007,” stated Leif Johansson, president & CEO of Volvo Group. “Consequently, we have already begun to prepare for a reduced production capacity in our North American truck plants….we are prepared to increase capacity later in the year.
“We think the market will be coming back in the second half of 2007,” he continued. “While we don’t have any visibility of that yet—we don’t expect the second half of 2007 will have negative news.”
Paccar—parent company of Kenworth and Peterbilt—reported an increase in net earnings of 32% to $403.6 million for 3Q 2006, compared to $304.8 for 3Q 2005. Paccar’s operating income for its global truck, bus and parts operations was $482 million in 3Q 2006, 22% higher than 3Q 2005.
“Paccar expected U.S. and Canada Class 8 retail sales to be approximately 315,000 units for 2006 and could be 200,000 to 230,000 units during 2007 as the industry adjusts to the higher component costs necessary to meet the EPA 2007 emission thresholds,” said Tom Plimpton, Paccar president. “Following a period of adjustment, Paccar expects continued growth in the transportation sector.”
According to DaimlerChrysler, 3Q 2006 NAFTA unit sales of 55,400 by its Freightliner, Western Star and Sterling brands, part of the company’s Truck Group, were 3% higher than in 3Q 2005. Operating profit for the global operations of the Truck Group, which also includes Mercedes-Benz, Mitsubishi Fuso, Thomas Built Buses and Detroit Diesel, was €556 million, a 57% increase over 3Q 2005.
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