Volvo CEO Sees Europe Truck Mkt Down 40% In '09

Sales of heavy trucks in Europe are likely to drop about 40% in 2009, but demand for trucks globally probably will start recovering before the end of the year, the head of AB Volvo (VOLV-B.SK) told Dow Jones Newswires in an interview Tuesday.

Chief Executive Leif Johansson said he thinks between 180,000 and 200,000 trucks will be sold in Europe this year, down from 318,700 units in 2008.

His comments came the same day as Volvo reported that its truck deliveries in February fell 51% globally and 63% in Europe from a year earlier.

"It's an incredibly weak start to the year," he said.

The credit crisis is the big culprit hurting demand, he said.

"It's still difficult for our customers, and their customers, to get financing for products," he said. "It's the frozen-up financial system that's hurting us so bad."

He said he thinks the credit crisis will start easing in two or three quarters, after which a more normal recession will last for some time. Demand for trucks is likely to start picking up toward the end of 2009, he said.

"We believe in a stronger second half of the year," he said.

The markets hurting the most, he said, are Western Europe, the U.S. and Japan. Parts of China and India already are showing signs of recovery, he said.

Eastern European demand is clearly suffering as well, following the recent unraveling of the region's previously fast-growing economies. In February, Volvo's truck deliveries in Eastern Europe plunged 92% to 240 trucks, down from 2,850 units.

Johansson also said he is aiming for Gothenburg, Sweden-based Volvo, the world's second-biggest truck maker after Germany's Daimler AG (DAI), to emerge from the crisis "really strong, with small inventory, good cash flows and a (trimmed-down) cost level" and to start gaining market share.

Volvo, which also has suffered a sharp drop in demand for its buses and heavy equipment, has reduced its workforce by more than 16,000 employees around the world since September, with about half of those job cuts in Sweden. The company, before the layoffs, had more than 100,000 employees.

He said one or more divisions within Volvo are likely to announce more layoffs, though he said the company already has "taken big action (to reduce the workforce) so let's first see where that leads us."

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