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    21.920
    -0.140
    -0.6%
  • OTVI.USA
    13,721.420
    82.630
    0.6%
  • TLT.USA
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Company earningsNewsOEMTrucking

Traton urges European government-sponsored swapping of older trucks

Volkswagen subsidiary reports lower first-quarter results across the board

Traton Group, (CXE: 8TRA) the holding company for Volkswagen AG’s truck and bus businesses, urged a European “cash for clunkers” program to boost new truck purchases after reporting lower sales, earnings and orders in the first quarter on Monday.

“What Europe needs right now are investment incentives for the environmentally friendly modernization of truck fleets as a means to overcome the crisis in this system-critical sector,” said Andreas Renschler, Traton CEO and member of the VW Board of Management.

The coronavirus pandemic made a difficult first quarter worse by forcing the shuttering of Scania, MAN and Caminhões e Ônibus facilities. The plants are slowly restarting operations with new protections for workers to prevent the spread of the COVID-19 virus.

During the Great Recession in 2009, the U.S. government gave cash vouchers to owners of old cars if they would scrap them for a new vehicle. With auto sales down more than 20% this year, U.S. sentiment is growing for a new round of “cash for clunker” incentives.

“If a fleet modernization program can be initiated quickly across the whole of Europe, it will be possible to replace trucks weighing more than 6 tons with more economical models,” Rentschler said.

“This would not only create jobs in the forwarding and commercial vehicle industries but also help the European Union to meet its environmental targets.”

Tough quarter

Traton Group unit sales fell 20% to 46,000 in the first quarter of 2020 from 57,200 vehicles in the first three months of 2019. Incoming orders dropped 16% to 54,200 units. 

January-March sales of 5.7 billion euros ($6.2 billion) were down 11% compared to 6.4 billion euros a year ago. Operating profit of 161 million euros ($175 million) was down 67% from 490 million euros in the same period of 2019.

TRATON is focused on conserving cash to get through the health crisis, the duration of which it cannot predict.

“There is a clear focus on safeguarding liquidity here. And we are bracing ourselves for a substantial decline in both sales revenue and operating profit in the second quarter,” said Christian Schulz, TRATON chief financial officer. “All the key figures will be negatively impacted.”

Navistar acquisition

TRATON is reconsidering investment priorities and research and development projects, Schulz said.

That presumably includes a $2.9 billion pending offer for the 83% of Navistar International Corp. (NYSE: NAV) that it does not already own. Traton made the unsolicited offer January 30 after vacillating about a full acquisition since it purchased 16.6% of the Lisle, Illinois truck maker for $256 million in September 2016.

Navistar, which has only said it was studying Traton’s $35 a share cash offer, is the most likely vehicle for Traton to gain entry into the North American market, where it currently does not compete with larger rivals Daimler Trucks and Volvo Group. 

Traton and Navistar collaborate on engines and purchasing. Traton has significant input into a new plant Navistar is planning in San Antonio, Texas. In 2019 Navistar opened the door for Traton with a limited opportunity for the sale of Scania off-highway mining equipment in Canada.

Navistar recently sold $600 million of senior debt in a private offering to boost its liquidity.

Alan Adler

Alan Adler is a Detroit-based award-winning journalist who worked for The Associated Press, the Detroit Free Press and most recently as Detroit Bureau Chief for Trucks.com. He also spent two decades in domestic and international media relations and executive communications with General Motors.

One Comment

  1. We need to spend scarce resources on health care and food for all the poor people. I have seen many homeless people die in the past 4 weeks including those with temp dumped on the street. I got similar reports from Europe and New York City. People are more important than corporation profits . Until China is brought to task and protection for people under risk of C 19 is provided corporate profits need put way down the list. The insurance companies and health care and supplies is top priority.