* U.S. trucking market has bottomed - Daimler exec
* Company can be profitable at lower demand levels
* Expects faster consolidation
* Negotiations under way to resolve Chrysler parts dispute
By Nick Zieminski
NEW YORK, Oct 7 (Reuters) - The world's biggest truckmaker,
Daimler AG (DAIGn.DE), is seeing evidence the U.S. truck market
has bottomed, but it remains cautious about the pace of any
recovery, the head of Daimler's truck division said on
Wednesday.
Andreas Renschler, a member of Daimler's board, also said
the company could be profitable at current sales levels, which
reflected a downturn he called longer and deeper than ever
before. But he does not expect demand to stay depressed at
current levels, citing improved order trends in the United
States.
"There is a glimmer of hope here in the U.S. that we are
slowly headed for a recovery, but it remains to be seen whether
this is sustainable," Renschler told reporters in New York.
The company last year slashed capacity by closing plants in
Ontario and Oregon, aiming to improve annual earnings by $900
million by 2011, a target it reaffirmed on Wednesday. But last
month it reversed the decision to close the Oregon truck plant,
citing prospects for a large U.S. military order and an uptick
in demand. [ID:nLU75050]
"We have reached the bottom," said Martin Daum, who in June
was named president and chief executive of Daimler Trucks North
America LLC.
"The second quarter was the worst (in terms of) order
intake, factory output, sales," Daum said Wednesday. "Every
indication these days is that it's not going to get worse."
Daum said the U.S. food industry was picking up, helping
sales on the U.S. West Coast. Renschler predicted consumer and
housing markets in the United States will be first to recover,
helped by government stimulus. Demand for trucks to carry
consumer goods or construction materials would then follow,
since truck sales are highly correlated with the economy.
North American truck sales rose 9 percent in August from
July, the company said. Daimler, whose brands include
Freightliner, Mercedes and Fuso, predicts the North American
truck market could rise 10 percent next year, but cautions that
growth could be a little less or a little more.
"We don't know," Renschler said about 2010 demand.
GLOBAL MARKETS
Daimler, which is set to report third-quarter results on
Oct. 27, said it expects demand for medium- and heavy-duty
trucks to be down 50 to 60 percent in Western Europe this year,
and down 40 percent in Japan and North America. The global
truck market is seen cut in half this year, it said.
Renschler said Daimler can be profitable selling 250,000
trucks a year, "but I don't think we will stay at this level."
Daimler Truck revenue fell 33 percent to 9.2 billion euros
in the first half.The division sold about 120,000 trucks in the
first half of the year, down 48 percent from a year earlier.
Its 2008 sales of 472,000 units compare with 516,000 in 2006.
Renschler said global sales would not return to such peak
levels in the near future, so Daimler has cut back capacity.
But it is not curtailing investments in emerging markets,
especially so-called BRIC countries of Brazil, Russia, India
and China, where "substantial growth" was likely.
Meanwhile, industry consolidation was likely to accelerate,
and Daimler was eyeing more opportunities like its recent
investment in Russia's Kamaz (KMAZ.MM), the executive said.
Daimler's competitors include Sweden's Volvo (VOLVb.ST),
the world No. 2, and Scania (SCVb.ST), Germany's MAN SE
(MANG.DE), Japan's Hino (7205.T) and Isuzu (7202.T), as well as
U.S.-based Navistar International (NAV.N) and Paccar (PCAR.O).
UNCERTAIN RECOVERY
Some peers see scant evidence of a trucking recovery.
An association of European vehicle manufacturers, ACEA,
said last month there were "no real signs of recovery." The
heavy truck market in Europe fell almost 48 percent in the
first eight months of the year, while orders in the first half
of 2009 were down 85 percent from the same period in 2008.
The chief executive of French tire maker Michelin (MICP.PA)
said at the Frankfurt Motor Show the truck market was still
struggling. And the head of MAN's commercial vehicle group said
on Sept. 24 it will be "almost impossible" for the group to
post a profit in the second half.
Separately, Daimler spokesman Han Tjan said the company was
negotiating with former subsidiary Chrysler LLC toward
resolving a legal dispute over parts, including a new axle,
Chrysler needs for its new models.
"We have offered a proposal and that is under negotiation,"
he said. "Everyone wants to resolve this as quickly as
possible."
Chrysler has sued Daimler, saying the German automaker has
failed to honor supply contracts for parts essential for the
production of key 2010 Chrysler vehicles. Chrysler, which
emerged from bankruptcy in June under new management led by
Fiat SpA (FIA.MI), said it would be forced to halt production
of several 2010 model-year vehicles without the components.
Daimler shares closed down 0.7 percent at 33.53 euros on
Wednesday.
(Additional reporting by Christiaan Hetzner, editing by
Matthew Lewis)
