West European Trailer Sales Set To Fall In 2009, 2010

There is a curious dichotomy impacting the West European trailer market. Demand for trailers, as measured by the registrations figures, is at an all time high – higher even than 2007 which was a record year. At the same time production of trailers has plummeted. In many cases plants are running at 50% of the output levels of 2007. How can this state of affairs be explained ?

Following the shortage of vehicles and axles in 2007 and early 2008, both trailer and component manufacturers increased their production capacity, according to consulting group CLEAR. However, as a consequence of the shortages trailer customers had over-ordered and trailer manufacturers had started hoarding components. As soon as this new capacity was in place, the orders from customers started to be reduced or cancelled and stocks of finished trailers built up. Then production started to be cut back and orders for components were cancelled. Not only do trailer manufacturers have plenty of finished trailers but also plenty of components, so the component manufacturers will take a double hit, until these stocks are cleared.

Focussing on the seven largest West European markets, demand in 2008 is forecast up 0.6% at 173,000 trailers and semi-trailers. Order books were full for the first part of 2008 but few firms have orders for the last quarter. Sales in 2009 are forecast significantly lower: a double digit fall.

Spain and Ireland are suffering from the collapse of their speculative house building booms. Trailer demand in Spain for the last quarter of 2008 is down 50% on 2007. Switzerland is the only other country that will see a large percentage fall in registrations. Several trailer markets are strongly up in the first nine months of 2008, e.g., Germany (9.6%), France (13.4%), Belgium (14.8%) and the Netherlands (3.8%). However, all are assumed to continue to slow in the last quarter.

It was hoped that East European demand for trailers would support exports and therefore production levels in the west. This now seems unlikely. Looking at truck sales in East European EU countries these are plummeting in late 2008. It is reasonable therefore to conclude that exports of new trailers to the East will have a difficult 2009 and 2010. Russia, Belarus and Ukraine may prove exceptions and remain relatively buoyant

“The credit crunch has now reached the real economy,” said Gary Beecroft, managing director of CLEAR. “Instead of a gentle slow down spread over a few years we are face a vicious drop in demand over 2009 and 2010. However, the slightly better news is that the recovery will start in 2011 - earlier than previously expected.”

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