For West Europe as a whole, 2008 will see sales just below last year’s level, despite the fact that halfway through the year, large markets such as Germany, France and the Netherlands are actually running ahead of last year’s figures, according to consulting group CLEAR.
Focusing on the seven largest West European markets, demand in 2008 is forecast up 0.2% at 172,000 trailers and semi-trailers. Order books were full for the first part of 2008 but many firms are seeing orders reduced for the second half, particularly from the vehicle leasing and rental sector. Sales in 2009 are forecast significantly lower.
Measured in percentage change against 2007, the UK, Ireland, Denmark, Sweden and Finland are set to fall, plus of course Spain. The English- speaking and Scandinavian markets are usually the first to show the effects of a downturn in the economic cycle and that is what we see here. Mainland Europe will follow 12 months later. Spain and Ireland are suffering from the collapse of their speculative house building booms.
So what has pushed the market to this extraordinary level, and why is it sliding into decline in 2009? The principal factor is the economic cycle, which sees low growth in the first half of each decade and high growth in the second half. However, in this decade it seems that the market has peaked rather early.
One reason for this is that the new EU countries admitted since 2004 have been absorbing used-vehicle imports at a very high level. That means that West European transport firms have been able to renew their vehicle fleets early. It is claimed in some quarters that 3-year-old vehicles belonging to large fleets have been replaced with new vehicles at next-to-no costs. That is because the large fleets use their buying power to negotiate low prices on new vehicles, while their re-marketing arms are getting attractive prices for their used trucks and trailers.
There is an ever-growing demand for transport, and EU enlargement has stimulated this further. Recent attempts to introduce longer truck/trailer combinations that would have reduced the overall number of vehicles on the road received a serious setback when German politicians rejected their introduction and the British government has decided not to allow even a restricted trial. This could affect their adoption in the rest of Europe. With rail, air and water transport unable to offer either a cost or time efficient alternative, there will be a need for more trucks and trailers on the road.
Germany, which has the largest border with new EU countries, has benefited most from this development. It produces over half of the trailers made in the Western Europe and supplies most of the used and new trailers sold in the East. As a result its exports have rocketed, resulting in a production level more than four times that of its nearest European rival, France.
Gary Beecroft, managing director of CLEAR said, “The current difficulties in the financial markets and banking sector will not have a significant impact on the transport equipment market. What will eventually push the market lower is the economic cycle.”
The U.S. sub-prime issue will probably result in some loss of business confidence for 2008, leading to reduced investment and fewer new vehicle sales. However, CLEAR is of the opinion that economists are over-pessimistic for the short term but over-optimistic for the medium term, say 2010-2012. According to Beecroft, “The last two decades have started with a slowdown – next decade will be the same, but with the slowdown coming a little earlier: 2011 will be the bottom of the market.”
The West European Trailer Market Report (July 2008) can be obtained from CLEAR at firstname.lastname@example.org
A new report for the East European market will be issued in September 2008 before the IAA trade fair in Hannover.