Scania CEO sees Europe truck market shrinking 10%

STOCKHOLM: Scania chief executive Leif Ostling, who will leave the position to join the board of majorityowner Volkswagen, told Reuters on Saturday he expects the European truck market to shrink by about 10% this year.

He said truck markets had not changed much since Scania reported on its first quarter in April and his outlook for the European market, Scania’s biggest, was in line with the drop forecast by Volvo.

“It’s tough still, in general and in Europe,” he said. “We gave roughly the same figure as Volvo did for the European market. We haven’t changed that (view),” Ostling said.

Last year, the total market for heavy trucks among 25 European Union countries plus Norway and Switzerland was 241,200 units.

Ostling predicted in April that the market would shrink to between 200,000 and 220,000 units this year as the eurozone crisis dampened demand in the highly cyclical heavyduty truck business.

His job will be to push through a closer alliance between Scania and MAN Group, also owned by the German carmaker.

“(My task will be) to coach the dif- ferent co-operations and to urge on tthat sensible cooperations emerge bbetween Scania, MAN and Volkswagen ... and make sure we reach results.”

Scania and MAN have been holdiing talks on bringing their operattions closer together.

“Within purchasing, development, and also within methodology within production and logistics there’s a lot to do, first and foremost to learn from each other,” Ostling said.

“At the same time, these three companies are also competitors ... we have to continue to work with separate brands, to keep these identities crystal clear.”

Ostling said he did not see Scania and MAN as one merged company at any point in time.

He said the work of joint working groups created a couple of years ago to boost co-operation between the companies was progressing, however slowly. “We work with very complicated industrial products and it takes a lot of time to dig into all the details. It takes time, but at the same time we have found several interesting parts,” he said.

“But it’s all relatively small, not so much money per unit, but multiplied by volume it renders quite a lot of money. So, we have already picked up synergies.”

He said another benefit seen already from the co-operation was that suppliers had become more careful about raising prices, or had even lowered prices, on components. – Reuters