Volvo shipments fall, order weakness linger

World number two truck maker Volvo on Tuesday posted a 12 percent year-on-year fall in October deliveries of its trucks and said the order trend in its key European market was still weak.

Volvo, which sells trucks under brands such as Renault, Nissan Diesel and Mack as well as its own name, said in a statement deliveries fell 28 percent in its biggest market, Europe, where it is scaling back production and selectively idling plants. Deliveries fell 26 percent in North America.

Truck makers across Europe have seen demand evaporate in recent months as the worsening global financial crisis has pushed export markets into recession and starved customers of access to the credit necessary to finance purchases.

The downturn has been dramatic, with the market coming off years of robust demand.Volvo's third-quarter report last month provided grim evidence of the decline as it showed orders in Europe, after adjusting for cancellations and uncertain purchases, had dwindled to almost zero.

"October is a bit lower than I had expected, especially for Renault. One should however keep in mind that this is only one month out of three in a quarter and it can vary a lot between these," said one analyst who declined to be identified.

"What is interesting though is their comment on Europe, that it continues to look weak and that they have a lot of cancellations. So it still looks rather bleak."Shares in Volvo, the world's second biggest truck maker after Germany's Daimler fell 1.1 percent following the release of the report, underperforming the Stockholm bourse's blue chip index which was flat on the day.

ORDERS WEAK

Volvo, which in recent weeks has announced thousands of job cuts, said European customers, remained "very cautious" due to the broader economic uncertainty."In Europe, the weak order intake trend from the third quarter continues, with net order intake being negatively affected by a further weakening inflow of new orders as well as a substantial level of cancellations of previously placed orders," the company said.

"Volvo Trucks and Renault Trucks are responding to the weakening demand by reducing production rates in the fourth quarter by taking stop days and stop weeks in the European manufacturing system, in particular in December.

"A weakened demand is also noted outside Europe and North America."

In Asia, home to a bigger share of the group's business following the acquisition last year of Nissan Diesel, deliveries were up 33 percent from a year ago, but the increase was half that of the aggregate growth rate in January through October.

In North America, the heavy-duty market has yet to regain its footing after a sharp decline in demand at the start of 2007, a hangover from a buying spree ahead of new green engine rules.

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