News that Barclays Capital has downgraded Scania to ‘underweight’ (from ‘equal weight’) can be taken at two levels. Most immediately, it is a clear reflection on what might be seen as Scania’s somewhat conservative strategy. The downgrade references the elderly R Series and Scania’s bias to an ailing European truck market – both very fair points. Scania embraces gradual evolution over eye-catching revolution, both in terms of its vehicle and its market strategy and, whilst this might not be the stuff of snappy headlines, it is a strategy that has done the Swedish OEM little harm in the past.
Will truck buyers, a diminishing breed in Europe, be swayed most by the newness of the Mercedes-Benz Actros and the Volvo FH? Not if they want to stay in business; total cost of ownership defines the competitive landscape here, and if ‘new’ happens to be ‘more expensive’ by this measure, then ‘new’ will be a moot point. In a trading environment that is at best fraught, European truck buyers are probably more concerned right now by the water-tightness of their lifeboats than their colour.
Scania embraces gradual evolution over eye-catching revolution, both in terms of its vehicle and its market strategy and, whilst this might not be the stuff of snappy headlines, it is a strategy that has done the Swedish OEM little harm in the pastv
The mention of an ailing Europe is far more pertinent. MAN SE’s Chief Executive, Georg Pachta-Reyhofen, has set expectations to the low end, telling Reuters that “Our results were not that bad, but one cannot be satisfied.” Not that bad is a phrase laden with meaning, but one cannot help but presume that they were not that good either. Bearing in mind that MAN is now almost a complete vassal of the VW empire, we can assume that Pachta-Reyhofen can afford to be fairly candid here. MAN has applied for Kurzarbeit for H1 2013 – clearly how much of this allowance it will use depends upon future market conditions – but the Munich-based OEM now seems to be functioning as a bell-weather for European truck activity generally. If it’s bad for MAN, it’s likely to be bad for the other OEMs.
Not that bad is a phrase laden with meaning, but one cannot help but presume that results were not that good either
In this context, the Barclay’s note is very timely. Exposure to Europe’s truck market is going to do no one any favours, at least for the first half of this year. During the last slew of earnings, some fairly brave comments were made concerning the prospects for the region for 2013, and it seems as if the upcoming round of earnings will be characterised by the sounds of engines being slammed into reverse.
Speaking to BBC News recently, MAN’s truck business Chief Executive, Anders Nielsen, was very direct: “This time it is not a quick fix … for the next two years, we do not see a big pick up in Europe.” In an industry that is frequently beset by artful language, Nielsen sets a standard for clarity that is both noteworthy and praiseworthy. As a number of stakeholders within the European truck sector gear up to report over the coming weeks, their choice of words should be watched with consummate interest.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Oliver Dixon is Editor, World Truck Analysis
The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com
