November 1, 2018 / 9:36 AM / 9 months ago

Truckmaker Scania expects lower China demand over next six months

STOCKHOLM, Nov 1 (Reuters) - China’s demand for trucks and buses is currently down about 10 to 15 percent from previous quarters and customers are forecasting fewer vehicle purchases for the next six months, the head of truckmaker Scania told Reuters.

A string of global automakers, including rivals Daimler and Volvo, have warned of slowing demand in the world’s biggest auto market, but few of them have given details about what it means for demand beyond the immediate quarter.

CEO Henrik Henriksson said on Thursday that mileage and load information Scania was receiving from all its operational trucks and buses in China showed that its vehicles were still fully utilised and running at high mileages.

“(But) when it comes to future demand for vehicles for customers that are transport companies they are indicating slower request for demand for the coming six months,” Henriksson, speaking after unlisted Scania reported nine-month results, said.

“It’s still a marginal rebalancing of future needs that we see, so it’s not a dramatic drop.”

Scania is part of Volkswagen and its parent has plans to build a global trucks business called Traton by integrating Scania with its MAN divisions to challenge Daimler and Volvo.

VW has been hiring bankers to manage a potential 6 billion euro initial public offering of Traton, sources have told Reuters.

Henriksson said: “I cannot comment on any specific numbers but 6 billion is probably a wrong number... it’s not in proportion even if you would just look at the balance sheet of the different companies in the group.” He did not give more details.

Asked about the timeline of the IPO, he said: “We’re working on this now for more than a year and the preparing work that is being done is ahead of plan. The final decision... is a question for our owners and Volkswagen.”

The car industry globally is facing higher raw material costs and lower demand due to tariffs and sanctions announced by United States. In Europe, the industry also faces the possibility of a hard Brexit or no-deal Brexit which would stall the movement of components and vehicles to and from Britain and continental Europe.

To tackle Brexit, car companies are mulling flying in components, changing ports or stockpiling. Henriksson said Scania planned to continue using its UK retail network to sell products made in France and Holland.

“We are doing detailed planning for the coming 3 quarters to make sure we fulfil customer demand for vehicles regardless of what we will have in different scenarios for the outcome of the Brexit negotiations. That’s how we’re preparing ourselves.” (Reporting by Esha Vaish. Editing by Jane Merriman)

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