SODERTALJE, Sweden (Reuters) - Swedish truckmaker Scania SCVb.ST did not see the usual seasonal slowdown in Europe in the third quarter, it said on Thursday, as fleet operators rush to buy new vehicles before new emission standards compel them to buy more expensive models from January 1.
A pick-up in demand for heavy-duty trucks has been gathering pace across Europe’s long-suffering market this year and in July Scania said it would step up production in two stages over the rest of the year.
At the heart of the European recovery is a need to replace now ageing fleets bought in the boom years leading up to the 2008 financial crisis, but demand for older models, so-called Euro 5 trucks, before the new emission rules come into force, has played a big part.
“There is a replacement need and an interest among customers to invest in Euro 5 trucks before year-end. In the light of this, we did not see the normal seasonal downturn in European order bookings during July and August,” said the company, which is majority owned by Volkswagen (VOWG_p.DE).
The new Euro 6 trucks are around 10,000 euros more expensive than the preceding generation, a price increase of about 5 tpo 10 percent compared with Euro 5 vehicles, mainly due to their redesigned engines.
However, while European demand recovers Scania also said on Thursday it had seen a tempering in the market boom in Latin America compared with the preceding quarter.
Scania, which has no presence in the United States, generates a greater share of sales than peers such as market leaders Daimler (DAIGn.DE) and Volvo (VOLVb.ST) from Latin America where Brazilian government incentives have stimulated sales in the past year.
Worries now focus on how the market will react once the subsidies are rolled back, while the currency turmoil surrounding emerging markets such as Brazil due to the expected eventual slowing of Federal Reserve bond buying has raised further doubts.
“We have seen some softening during the summer, but one should put that in the perspective of the order backlog, the lack of visibility and the extreme demand that we have had,” Chief Executive Martin Lundstedt said during a presentation at Scania’s headquarters south of Stockholm.
Outlining a forecast for demand across the group for the 2012 to 2020 period, the company said it had begun boosting its technical capacity to accommodate a near doubling of deliveries to 120,000 vehicles a year, which will require an investment of 1.5 billion crowns ($232 million) over three years.
Last year Scania delivered some 61,000 trucks.
($1 = 6.4649 Swedish crowns)
Reporting by Niklas Pollard and Helena Soderpalm; Editing by Greg Mahlich