The sudden drop in orders at Europe’s major commercial vehicle manufacturers revealed this week shows the global recession is hitting the sector every bit as hard as the car market.
Truckmakers Volvo, Scania, MAN and Daimler, as well as construction equipment makers such as JCB have all recently announced production cuts and logistics contracts appear to be affected.
October figures paint a bleak picture for both Western and Eastern European markets, and the once strong emerging markets in Ukraine and Russia have weakened as well. Deliveries of Volvo Trucks in Europe have fallen 19 per cent compared to last year, to just fewer than 5,000 units. The company intends to cut production and a further 900 jobs on top of 1,400 announced in September.
A sharp decrease in vehicle orders is also worrying. Volvo’s third quarter report reveals a shocking drop in European orders, from nearly 42,000 in that period 2007 to just 115 in 2008, as nearly 20,000 orders were cancelled, a clear sign that companies are reconsidering earlier plans to expand fleets. The story is similar at MAN and Scania, as each saw order bookings drop 47 per cent and 41 per cent, respectively.
JCB, the UK-based manufacturer of construction equipment, is also cutting production. Speaking on last Friday’s Today programme on BBC Radio 4, CEO Matthew Taylor said the “very severe deterioration” in orders had hit the company’s output, with the UK market down by as much as 80 per cent, and exports markets also suffering.
“Building 20 per cent less of the machines for our customer base than we were is a very dramatic deterioration,” said Taylor. "Over the next four or five months we’ll be building at a level of about 65 per cent down on where we were for those four or five months last year.”
The reduced output is likely to impact the sector’s logistics providers, which have played an increasing role for commercial vehicle makers in recent years as they increased global sourcing and exported more finished products to new markets.