The West European trailer market will experience a 37% decline during this downturn – worse than the 31% fall in 1992-93, according to consulting group CLEAR.
The ’92-93 demand fell by 37,000 trailers, while this year’s demand will fall by 77,000 trailers.
Back in 1993, the peak demand for trailers before the downturn was 120,000 units. This time, the market reached 208,000 in 2007 and is forecast to fall to 131,000 in 2009.
This is serious enough for the trailer manufacturers, the leading three of which are the German firms of Schmitz, Krone and Kögel, but is also horrendous for the more familiar names of the component manufacturers that supply them. Companies that are household names such as tyre makers Michelin, Continental, Bridgestone and Goodyear Dunlop; axle manufacturers BPW, SAF Holland, ArvinMeritor and Daimler AG; brake manufacturers Knorr, Haldex and Wabco. All these companies invested heavily in ’07-08 to boost output of components for the trailer market as it reached record levels of production, only to see demand collapse.
The problem for component suppliers is even worse than the figures above indicate. Since the expansion of the European Union in 2004 there has been a boom in demand for trailers in Eastern Europe, both for new trailers and used. A very large proportion of this demand was met by German manufacturers or German transport companies selling there used vehicles and buying new.
Before 1993, peak production of trailers was 126,000 per annum, but in 2007 production reached 292,000, which is forecast to fall to 157,000 in 2009, a fall of 46% or 135,000 trailers. The reason the fall in production is so much larger is that East European markets have collapsed as trailer finance dried up, killing export demand.
With the market for trailers having been strong for several years, many transport firms have lots of new equipment, which they can easily forgo renewing for a year or two. In addition, large stocks of finished vehicles built up, meaning there was no need for manufacturers to build more or order components. In many cases production was down by 80% at the start of 2009.
Gary Beecroft, managing director of CLEAR said “Our forecast is based on the second half of 2009 being better than the first in terms of trailer production, although demand is evenly split between the two halves. There are clear signs that we have reached the bottom of the downturn and hazier indications of an improvement in orders here and there.”