European truck market heading for recovery after short pandemic plunge

Paccar

Paccar said that customer demand for its trucks was "very strong" and that truck deliveries increased in the first quarter of 2021 sequentially, in spite of the constrained supply of semiconductors affecting the auto sector. In 1Q 2021, the company had consolidated net sales and revenues of $5.85bn, up 13.3% year-on-year (YoY), with sales up strongly, by 12.7%, for its key Truck segment (new truck deliveries of 42,200 in the reported quarter, +9.9% YoY), while an Aftermarket Parts segment had a record quarterly revenue, up 16.2% YoY.

Paccar commented that freight tonnage was strong in the first quarter of this year as the US economy continued to recover, with trucks accounting for nearly three-quarters of the freight transported in the country, based on the 2020 numbers. The company's Kenworth and Peterbilt's Class 8 truck orders increased nearly three-fold year-on-year in 1Q 2021 in the US and Canada.

Earlier in the year, Paccar also launched new heavy- and medium-duty truck models which offer higher fuel efficiency and advanced driver assistance systems (ADAS). Importantly, DAF started manufacturing CF Electric trucks during the month of April. Kenworth and Peterbilt are expected to launch zero emissions truck production in the coming months. In 1Q 2021, Paccar began producing battery electric customer trucks for applications such as port, refuse and local deliveries. In these applications, trucks return to depots for recharging each day and have a calibrated range to optimise battery weight and cost. Recently, on 9 June, DAF announced it was launching a new generation of trucks, with improved fuel efficiency (up to 10% higher fuel efficiency and an equivalent reduction in CO2 emissions), enhanced safety features and additional comfort features for drivers. The production of this new generation of trucks is due to start in October.

Volvo Group

Volvo Group commented that the first quarter of 2021 was marked by a high level of activity among its customers, including a strong freight market, with increased transported volumes, driven by e-commerce, among other factors. As a result, the company's customers realised higher freight prices and achieved improved profitability, prompting them to expand their fleets to meet increased demand. Consequently, there was a strong order intake in Volvo Group's truck segment. The company noted that inventories of both new and used trucks were low globally and Volvo Group increased deliveries by 17% YoY in 1Q 2021, raising its profitability as well (with the company's operating margin more than doubling to 12.8% in the first quarter of this year, from 6.8% in the respective prior-year quarter). Volvo Group noted that the global semiconductor supply constraints had a limited impact on the company's production in 1Q 2021 while the company expected to lose production equivalent to two to four weeks of the international production, depending on the manufacturing site, during 2Q 2021 and further disruptions cannot be ruled out. Recently, the press reported that the company was halting production at its Ghent factory for the week of the 21 June due to a shortage of semiconductors.

Volvo Group noted that it continued to invest in the electrified, automated and connected technological solutions and the company already has fully electric trucks, buses and construction equipment in serial production. While presently volumes remain small, there is high customer interest in the products and with the expected rollout of the heavy-duty electric trucks by both Volvo Trucks and Renault Trucks in the next two years, the group would offer electric trucks with ranges that cover almost half of the truck transports carried out in the EU. In 1Q 2021, Volvo group also created a new joint fuel cell company called CellCentric in cooperation with Daimler Truck, aiming to make it a leading global manufacturer of fuel cells. In March, Renault Trucks outlined its further ambitions for electric mobility, targeting the all-electric Renault Trucks' offer for each segment - distribution, construction and long-distance transport - from the year 2023. In April, Volvo Trucks announced the start of sales of three new heavy-duty all-electric models later this year.

During 1Q 2021, Volvo Group had sales of SEK94,018mn, up 2.8% YoY on a reported basis but up 13% when adjusted for foreign exchange movements, helped by a robust increase in vehicle sales. The demand for trucks was broad based across segments both in Europe and North America, with truck fleet utilisation back to the pre-Covid-19 levels and demand for spare parts and services also strong. The Chinese market grew strongly in 1Q 2021, supported by subsidies to speed up the replacement of vehicles which do not meet the CN3 emissions standards. Chinese market sales grew strongly relative to 1Q 2020, which was severely affected by Covid-19. Other prominent markets, including Japan, India and Brazil also recorded positive dynamics. Volvo Group's total order intake was 85,461 trucks in 1Q 2021, up 123% YoY, and deliveries were 52,444, up 17% YoY. In Europe, order intake of heavy- and medium-duty trucks increased by 126% YoY in the reported quarter (to 39,081), with deliveries of 18,871 (+10% YoY). Truck order intake in North America increased by 369% to 22,215, with deliveries of 12,972 (+22% YoY). South American order intake and deliveries increased by 27% and 13% YoY, respectively.