MAN SE has confirmed that it has halted truck production for the week commencing 29 October, affecting 15,000 workers at facilities in Munich and Salzgitter, Germany.
Media reports have indicated that the company also plans to limit production in Munich and Salzgitter to four days per week in November and to halt output again from 24 December to 11 January, although these stoppages have not been officially confirmed.
Reuters cites an official company spokesperson as saying it may announce more details when it reveals Q3 earnings details on 30 October. According to the Reuters report, the spokesperson also confirmed that MAN plans to scale down administrative operations at its main truck and bus division from 29 October.
MAN has said that its third-quarter group orders were lower than the second-quarter intake as the downturn in business exceeded normal seasonal patterns.
Volkswagen, which holds majority ownership of MAN, recently reported in its Q3 group financial results that the German truck OEM had unit sales of 101,000 vehicles in the January-September 2012 period, with total revenue of €11,754m (US$15.2bn) and operating profit of €515m.
Scania, also majority-owned by Volkswagen, recently reported significantly weaker results in the quarter ended 30 September 2012, reflecting lower unit sales, declining revenue and the persistence of falling orders. Lower sales resulted in lower capacity utilisation and increased costs, resulting in the company’s Vehicles and Services business reporting a 39% year-on-year fall in operating income in Q3.
Scania’s President and Chief Executive Officer, Martin Lundstedt, noted: “Order bookings for trucks during the third quarter of 2012 decreased compared to the previous quarter. In Europe, the first part of the third quarter is usually characterised by low activity. However, order bookings in September continued at the same low level in many markets, affected by lower economic activity and hesitancy among customers to invest in new vehicles. This is despite a growing replacement need in Europe, given the low truck deliveries in recent years … The short-term outlook is very difficult to judge and imposes stricter demands for volume flexibility and cost control.”
Scania’s order bookings in Q3 2012 totalled 16,925, compared with 18,894 in Q3 2011, a decline of 10.4%, with truck orders alone down 9.8% at 15,437 (17,109). Bookings in Europe were down 15.0% at 6.136 (7,219) but rose year-on-year in Latin America – by 6.8% to 5,003 (4,685). Bookings in the year-to-date period were 52,320, versus 60,997 in the first nine months of 2011, a drop of 14.2%.
The Volvo Group has also recently reported year-on-year falls in revenue and operating earnings in the quarter ended 30 September 2012, reflecting weakening unit sales of trucks and buses, a jump in one-off restructuring and other costs, and under absorption of fixed costs in the company’s manufacturing system as production is lowered in order to reduce inventories.
Olof Persson, Volvo’s President and Chief Executive Officer, commented: “During the third quarter, sales for the Volvo Group were impacted by the weakening in demand that has become increasingly evident around the globe. To respond to declining demand and increasing inventories, we decided to adjust our production rates down in several parts of the company.
“In Europe, the weak demand has spread from southern Europe to an increasing number of countries and the normal pick-up of order activity in September was muted.
“In the short term, we have a tough quarter ahead of us to manage the consequences of the slow demand in the third quarter. However, with the production adjustments we are currently implementing, we believe we will have the right level of capacity going into 2013.”
Volvo’s Q3 2012 truck order intake totalled 45,272, versus 59,975 in Q3 2011, a fall of 24.5%, with orders in Europe down 27.7% at 16,091 (22,257). The year-to-date order total was 158,924, against 186,272, a fall of 14.7%.
Daimler Trucks also cautioned at the recent publication of Q3 results that it expects that the development of unit sales in the fourth quarter will be impacted by weaker demand than had previously been expected in major markets. This applies above all to western Europe and Brazil, but demand in the NAFTA region is also likely to level off in the medium duty segment. Daimler Trucks’ incoming orders in Q3 2012 totalled 95,432, versus 107,221 in Q3 2011, a fall of 11,789 units, or 11.0%. Orders in western Europe alone were down 21.2% at 11,984 (15,204). The year-to-date total was 308,096, 39,292 or 11.3% short of the 347,388 reported in the first nine months of 2011, with orders in western Europe down 11.0% at 40,641 (45,675).
