The collapse of the finance market has produced a spectacular result: out of fifteen East European countries, five are forecast to have drops in trailer demand of between 80% and 90%, according to consulting group CLEAR.
The average for the region will be a drop of 63%. The Baltic States are amongst the worst hit – in addition to the problems of finance, they, like Ireland and Spain, have seen the crash of a speculative property boom.
Another factor affecting these markets is that they have grown so fast, that in many cases, their trailer fleets are already approaching the size that will fully meet their transport requirements. When that happens, the high levels of trailer demand seen up until 2007 will be but a fond memory.
In 2009, every market in Eastern Europe will experience a fall in trailer demand and trailer production, the later falling by 60%. The collapse in demand for new trailers in the east resulted in one of the top three western manufacturers being forced into liquidation, as demand for imported new trailers vanished. Demand for used imports and locally made trailers has held up slightly better thanks to their lower cost.
Most goods in Europe move by road and most of that on a trailer. For this reason, the trailer market is a good indicator of the state of an economy.
In the five years ending in 2007, compound growth in the East European markets was 27%. In the first half of 2008, it had been hoped that the buoyant markets in the East would continue growing, or at least not shrink. However, in 2008 the market shrank by 11%, which was a much bigger fall than in Western Europe. The Baltic countries were the worst affected, while Turkey, Ukraine and Belarus posted a modest amount of growth.
Given the massive growth in demand for transport equipment in Eastern Europe and the lack of exposure of these countries’ banks to toxic assets (a.k.a. US subprime mortgages), there was some hope in early 2009 that trailer demand would fall by a relatively minor 20% compared to Western Europe’s more dramatic 40%.
However, the eastern banks were hit by the lack of interbank lending in the same way as those in the west. Many of the eastern banks and the larger eastern companies had borrowed in the West European capital markets. This source of funding dried up overnight. In addition, many institutions now had large foreign currency debts. The result: absolutely no finance available for transport equipment.
The Trailer Market Reports can be purchased from CLEAR. The following reports and databases are now available:
East European Trailer Market Forecast Report – September 2009
West European Trailer Market Forecast Report – September 2009
Trailer production by manufacturer database for West & East Europe – September 2009
RoW (rest of the world) trailer production and parc database for regions outside of Europe – June 2009
For more information, e-mail [email protected]