- Launch of the all-new UD Quester range and the new Volvo VM
- Good order books for the fourth quarter
- Stable markets expected for 2014
Most markets for 2014 expected to be on about the level of 2013
In the first eight months of 2013 a total of 136,966 new heavy-duty trucks were registered in Europe 29 (EU minus Bulgaria plus Norway and Switzerland) a decline of 8% compared with the year-earlier period. The outlook for the total market for heavy-duty trucks in Europe is that it will reach a level of about 230,000 heavy-duty trucks (unchanged forecast) with strong deliveries in the fourth quarter as a result of pre-buying ahead of the new emission regulations starting December 31, 2013. For 2014 the total market is expected to remain at the level of about 230,000 heavy-duty trucks.
Through September 2013, the total North American retail market for heavy-duty trucks decreased 9% to 171,666 vehicles, compared with 188,026 through the third quarter of 2012. Slow economic growth and weakness in the manufacturing sector during the second quarter affected third quarter retails. However, the construction market continues to recover and replacement demand remains high. In 2013, the total market for heavy-duty trucks in North America is expected to be at a level of about 240,000 trucks (previous forecast: 250,000). For 2014, the total market is expected to reach a level of about 250,000 heavy-duty trucks.
In the first nine months of 2013, the Brazilian market for heavy-duty trucks increased 22% to 76,615 vehicles, compared with 62,835 in the first nine months of 2012. Growth is driven by ongoing low financing rates, infrastructure investments and a strong crop season. The total Brazilian market for heavy-duty trucks is expected to increase and reach a level of about 105,000 trucks in 2013 (unchanged forecast). For 2014 the total market in Brazil is expected to remain at the level of about 105,000 heavy-duty trucks.
In China, the total market for heavy-duty trucks is expected to reach a level of about 710,000 trucks in 2013 compared with 636,000 trucks in 2012 (previous forecast 630,000). The total market for medium-duty trucks in China is expected to reach a level of about 290,000 trucks in 2013, compared with 290,000 trucks in 2012 (previous forecast 305,000). For 2014 the total market in China is expected to reach a level of about 700,000 heavy-duty trucks and about 280,000 medium-duty trucks.
In India, the total market for heavy-duty trucks remained subdued, and in the first nine months of 2013 declined by 34% to 105,566 trucks following a slowdown in the economy and decreases in fuel subsidies. The current outlook for the total market for heavy-duty trucks in India is 145,000 trucks in 2013 (previous forecast 160,000 heavy-duty trucks). The total Indian market for medium-duty trucks has declined by 15% for the first nine months compared with 2012 and is expected to reach a level of about 80,000 trucks in 2013 (previous forecast: 85,000 trucks). For 2014 the total market in India is expected to reach a level of about 145,000 heavy-duty trucks and about 85,000 medium-duty trucks.
Through September, the Japanese heavy-duty truck market increased by 1% compared with the first nine months of 2012. Economic measures by the government have started and the significant ongoing investment into public works projects is likely to stimulate the Japanese economy. For 2013, the total Japanese market for heavy-duty trucks is expected to increase to about 35,000 trucks (unchanged forecast). For 2014 the total market in Japan is expected to remain at the level of about 35,000 heavy-duty trucks.
Deliveries 4% higher than the third quarter 2012
In the third quarter of 2013, the Volvo Group delivered a total of 48,261 trucks, which was 4% more than in the third quarter of 2012.
Good order books for the fourth quarter
The total net orders were up by 7% in the third quarter compared with the year-earlier period. Net orders of 44,224 trucks and deliveries of 48,261 trucks resulted in a book-to-bill ratio of 92% for the Group’s wholly-owned operations.
In the third quarter of 2013 European orders reached 17,902 trucks, which was 11% higher than in the third quarter last year. Orders for Volvo Trucks increased by 31% and orders for Renault Trucks decreased by 10% compared with the third quarter last year. The available slots for 2013 for Euro 5 trucks from Volvo were sold out during the third quarter, which had a dampening effect on order intake. Order intake for Renault Trucks was negatively impacted by the phase-out of the old generation of trucks and customers waiting to place orders for the new generation which is only available with Euro 6 engines.
In North America, order intake during the third quarter increased by 29% compared with the third quarter last year with a particularly strong development for Mack.
In South America, orders decreased by 22% compared with the same quarter last year. The decline was a consequence of the order book for 2013 being filled during the quarter and anticipation of the Fenatran truck fair in late October.
Compared with the third quarter of 2012, orders in Asia declined by 4% while orders in Other markets rose by 31%.
Lower operating margin compared with last year
During the third quarter of 2013, the truck operation’s net sales amounted to SEK 43,248 M, which was 1% lower than in the third quarter of 2012. Adjusted for changes in exchange rates net sales increased by 6% compared to the third quarter last year.
The truck operations posted a third-quarter operating income of SEK 1,893 M in 2013, excluding restructuring charges of SEK 100 M. In the third quarter of 2012, operating income amounted to SEK 2,375 M excluding restructuring charges of SEK 560 M. The operating margin, excluding restructuring charges was 4.4%, compared with 5.4% in the year-earlier period. The lower profitability compared to the third quarter of 2012 is an effect of high costs for research and development, unfavorable currency effects and costs related to the introduction of the new truck ranges in Europe and Asia.
Compared with the third quarter of 2012, costs for research and development increased by SEK 939 M as a consequence of a swing from net capitalization last year to net amortization this year. Compared with the third quarter of 2012, operating income was negatively impacted by changes in currency exchange rates in an amount of SEK 768 M.
In the third quarter of 2012, operating income was negatively impacted by an increase in warranty reserves of SEK 500 M.
Quester - UD Trucks’ new heavy-duty truck platform for growth markets
On August 26, UD Trucks launched Quester, an all-new new heavy-duty truck range developed specifically for growth markets. Quester will expand UD Trucks’ customer base and contribute to the Group Trucks’ strategy by improving competitiveness and capturing growth opportunities in emerging markets. As a heavy-duty truck range, Quester provides a platform for a large number of applications within mining, construction, distribution and long-haul transportation.
The production of Quester started during the third quarter of 2013 in Bangkok, Thailand. Besides serving the domestic market, the plant in Thailand will also serve as an export hub for South East Asia and beyond. In the near future, the range will be manufactured in China for the Chinese market and later on also in India.
Introducing new Volvo VM line for Latin America
On August 26, the new Volvo VM truck line for Latin America was introduced at an event in Trancoso, Brazil. The trucks have a redesigned cab exterior with features similar to the Volvo FH trucks launched in Europe last year. Two new 8x2 and 8x4 models have also been added to the line. The new trucks will be Volvo’s main attractions at the Fenatran truck fair in São Paulo, Brazil, in late October.