DaimlerChrysler expects U.S. truck boost, slump in Europe

STUTTGART, Germany (Oct. 16, 2003) — DaimlerChrysler AG, the world’s largest truckmaker, reported that while European truck sales won’t increase until 2005 due to slow economic growth, demand in the North American market will begin to rise late next year.

The company said it expects recent cost cuts and increased parts-sharing among the company’s Mercedes, Freightliner, and other brands such as Detroit Diesel, will improve earnings even before sales rise, causing this year’s operating profit to be “significantly above’ last year’s level.

After three years of declines, U.S. truck sales should pick up at the beginning of next year and gather pace in 2005, said Rainer Schmueckle, head of the company’s U.S. Freightliner division. Next year, Freightliner expects sales for the entire North American market to rise to 172,000 heavy trucks and 135,000 light- to medium-duty trucks . By 2005, it expects demand to rise 220,000 heavy trucks a year and 160,000 light- and medium-duty trucks.

That sales growth optimism was absent for Europe. The company expects no increase in demand this year or next and sees only a modest rise in 2005.

Part of that expected growth in North America is likely tied into another projected pre-buying trend, in which trucking fleets stock up on equipment before another round of stringent Environmental Protection Agency regulations on new diesel engines takes effect in 2007. Carriers inflated sales numbers in early 2002 to avoid purchasing engines after October of that year — the deadline the EPA implemented for its first round of regulations on the amount of nitrogen and hydrocarbon emissions the new engines could produce. At the time the trucking industry expressed strong reservations on the exhaust gas recirculation (EGR) technology most engines OEs used to meet the EPA standard — fearing the new, more expensive engines would not meet the maintenance, durability, and most importantly, fuel economy standard of previous engines.

However, since then OEMs have said most fleets operating the EGR engines have not reported any significant problems.

— With files from Bloomberg News Service