president & CEO Rainer Schmueckle, addressing the media in a recent phone conference, reported strong results from the OEM's commercial vehicle activity for the first half of 2004. And he expressed confidence in strong truck sales for the remainder of the year.
“The truck market fundamentals are very good,” Schmueckle said. “Fleets are continuing to replace their equipment. The extension of the truck replacement cycle that we saw [begin] in '03 has come to an end.”
Schmueckle attributes the bulk of Class 8 purchases to pent-up demand brought on by fleets delaying their replacement cycle in recent years as opposed to adding trucks strictly to expand fleet capacity.
This year for the Class 8 market, Schmueckle projects total NAFTA retail sales will total 240,000 units. For the Class 6-7 market, he expects total NAFTA sales to reach between 160,000 and 165,000 units for '04.
Looking beyond '04, Schmueckle addressed the company's looming challenge of overcoming pre-buying to avoid new-emissions-compliant engines as 2006 approaches. He said Freightliner will push to get '07-compliant engines into the hands of its customers by the second half of '05 so they can be “tried out.”
Government incentives could also be another important factor in reducing pre-buy, Schmueckle added. “We are concerned large pre-buys in '06 that will send shockwaves through purchasing patterns,” Schmueckle said. “We believe a package of government incentives would help offset initial purchasing and operating costs of the new engines.”
He stressed the industry must get together and lobby for such incentives. “We do expect 2006 will be a year when a lot of customers will want to pre-buy,” Schmueckle added.
Schmueckle warned that commodity shortages could amplify the negative effects of pre-buy. “Any pre-buy in '06 would be worse than in '02, because the world economy will be making greater demand on raw materials in the years ahead.”
Freightliner's parent DaimlerChrysler's (DC)commercial vehicles division reported boosting its second quarter unit sales by 47% over the previous quarter to 184,900 vehicles. Revenues increased by 36% to 9 billion euros.
According to Schmueckle, North American sales had contributed significantly to a 36% second quarter revenue increase for the DC commercial vehicles divisions.
Just days after Schmueckle reported the OEM's good news in North America, the parent firm revealed that Eckhard Cordes has been named to head the company's prestigious Mercedes Car Group.
Appointed to head DC's truck businesses in 2000, Cordes is credited with overseeing reorganization of Freightliner and the company's other North American truck operations.
Under Cordes, commercial vehicle operations went from a posted operating loss of $413.7 million (343 Euros) in 2002 to an operating profit of over $1 billion (855 Euros) last year.
Cordes' truck duties will be taken over by Andreas Renschler, according to an announcement by the company's supervisor board in Stuttgart, Germany. Renschler has been heading DC's Smart Car division.
Schmueckle also said Freightliner has started to see a “fairly significant” shift in the way smaller fleets and owner-operators are spec'ing trucks in the past few months — with much more interest in aerodynamic models and in other fuel-efficient specs.