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Freightliner CEO reports strong results

Freightliner president & CEO Rainer Schmueckle, addressing the media in a phone interview today, reported strong results from its commercial vehicle activity for the first half of 2004, and 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 pentup demand from a delayed replacement cycle, as opposed to carriers expanding capacity.

Freightliner’s parent DaimlerChrysler’s commercial vehicles division boosted its second quarter unit sales by 47% over the previous quarter to 184,900 vehicles. Revenues increased by 36% to 9 billion euros.

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.

Looking beyond ’04, Schmueckle addressed the company’s looming challenge of overcoming pre-buying to avoid new-emmissions-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, Schmuekle added. “We are concerned of 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 noted 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 said. 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.”

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