The head of the DaimlerChrysler AG truck and bus group said Monday, Dec. 11, that the automaker expects its Freightliner truck division to be profitable in 2007, despite an expected sharp downturn in heavy-duty truck building next year that will lead to job cuts in the unit.
Andreas Renschler said that its North American plants are prepared for the downturn, which could mean reduction in heavy-duty truck volume of nearly 40 percent industrywide compared with 2006. Freightliner could see job cuts of up to 4,000 in 2007 due to the downturn, Renschler said. The company already said it would lay off 800 at its plant in St. Thomas, Ontario, which is operated by Freightliner Canada and produces the company’s Sterling-brand heavy- and medium-duty trucks.
New Environmental Protection Agency regulations go into effect next year, and truck makers pulled orders ahead this year due to demand from trucking companies for cheaper ’06 models. Depending on specification and weight class, Freightliner says its ’07 vehicles are subjected to price increases ranging from $4,600 to $12,500, before application of taxes, for the new engines.
“Based on this market development, we see at the moment we still will be profitable,” said Renschler, who expects heavy-duty business to fall off industywide in the second quarter before picking back up in the fourth quarter. The company learned from the last downturn in 2002 to prepare its plants for the “worst-case scenario,” Renschler said, adding that suppliers also seem to be better prepared.
Renschler also said DaimlerChrysler will produce one global heavy-duty truck engine — down from the four it now produces — at its Detroit Diesel plant next year, but that it will take until at least 2014 before the engine hits all of its trucks. Renschler also said the truck group is working on a common engine for its medium-duty trucks.