Bloomberg News

Scania Sales Chief Sees Firm Truck Demand in Shaky Economy

September 21, 2011

(Updates with analyst comments starting in fifth paragraph, shares in sixth.)

Sept. 21 (Bloomberg) -- Truck demand is holding up amid the global economic slowdown as Brazil, Russia, India and China continue to drive growth, Scania AB’s sales chief said.

While customers of the Swedish truckmaker controlled by Volkswagen AG are increasingly nervous about economic uncertainty, that has yet to translate into a decline in orders, Martin Lundstedt said in an interview yesterday at the company’s headquarters in Soedertaelje.

“Everyone is thinking especially about how the EU’s problems will affect the global economy the next few quarters,” Lundstedt said. As emerging-market orders grow, the truckmaker’s share of sales from western Europe has steadily decreased. Scania generated 52 percent of its revenue in western Europe last year, down from 65 percent in 2006.

Daimler AG, the world’s largest maker of heavy-duty vehicles, said Sept. 19 that it expects truck sales to keep growing even as economies show signs of cooling. “The trend is unequivocally positive,” said Andreas Renschler, head of Daimler’s trucks division.

“A lot of the turmoil with the truck stocks over the summer was due to fears about us heading into a new crisis situation where we see a sharp decline in orders,” Morten Imsgard, an analyst at Sydbank A/S with an “underweight” recommendation on Scania stock, said by phone.

Share Performance

Scania’s shares recovered from a 1.9 percent decline and were up 0.2 percent at 103.1 kronor as of 12:38 p.m. in Stockholm. Swedish rival Volvo AB, the world’s second-biggest truckmaker, pared a 1.8 percent decline and was down 0.1 percent. The OMX Stockholm 30 Index fell 0.4 percent.

“This is a pretty solid comment from Scania and it’s in line with what we’ve heard from other companies,” Imsgard said. “The demand situation isn’t that bad at the moment.”

Still, Scania is preparing to better tackle another slowdown after it “learned the lesson” from the crisis in 2008, when demand plunged about a third, said Lundstedt, who also leads the company’s marketing efforts.

Scania implemented a new agreement with Swedish unions this year that lifts the share of factory workers that can be temporarily employed to 30 percent from 20 percent. It has also cut truck delivery times to six weeks to eight weeks, from 10 months in 2008, Lundstedt said.

Preparation for Downturn

“We’re asking ourselves, how can we retain maximum flexibility to be as prepared as possible for a downturn,” the executive said.

Scania expects to meet a goal to double sales in China to about 1,000 trucks this year, and aims to reach about 5,000 vehicles in three to four years, Lundstedt said. The manufacturer may try to produce trucks in China when it hits about 10,000 sales a year in the country, he said.

Scania plans to start selling buses in India in the next year or two, Lundstedt said, reiterating comments he made in March. The truckmaker probably will establish an assembly plant in the country in “the next few years,” he said.

Lundstedt also reiterated that Scania aims to sell 150,000 trucks and buses by the next “peak in demand,” up from 63,712 deliveries in 2010.

In Europe, the truckmaker is having “fine development” in the northern portion of the continent, while southern Europe is struggling, the executive said.

--With assistance from Andreas Cremer in Berlin. Editors: David Risser, Robert Valpuesta

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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