The world's biggest truckmaker, Daimler AG , is seeing evidence the U.S. truck market has bottomed, but it remains cautious about the pace of any recovery, the head of Daimler's truck division said on Wednesday.

Andreas Renschler, a member of Daimler's board, also said the company could be profitable at current sales levels, which reflected a downturn he called longer and deeper than ever before. But he does not expect demand to stay depressed at current levels, citing improved order trends in the United States.

There is a glimmer of hope here in the U.S. that we are slowly headed for a recovery, but it remains to be seen whether this is sustainable, Renschler told reporters in New York.

The company last year slashed capacity by closing plants in Ontario and Oregon, aiming to improve annual earnings by $900 million by 2011, a target it reaffirmed on Wednesday. But last month it reversed the decision to close the Oregon truck plant, citing prospects for a large U.S. military order and an uptick in demand.

We have reached the bottom, said Martin Daum, who in June was named president and chief executive of Daimler Trucks North America LLC.

The second quarter was the worst (in terms of) order intake, factory output, sales, Daum said Wednesday. Every indication these days is that it's not going to get worse.

Daum said the U.S. food industry was picking up, helping sales on the U.S. West Coast. Renschler predicted consumer and housing markets in the United States will be first to recover, helped by government stimulus. Demand for trucks to carry consumer goods or construction materials would then follow, since truck sales are highly correlated with the economy.

North American truck sales rose 9 percent in August from July, the company said. Daimler, whose brands include Freightliner, Mercedes and Fuso, predicts the North American truck market could rise 10 percent next year, but cautions that growth could be a little less or a little more.

We don't know, Renschler said about 2010 demand.

GLOBAL MARKETS

Daimler, which is set to report third-quarter results on October 27, said it expects demand for medium- and heavy-duty trucks to be down 50 to 60 percent in Western Europe this year, and down 40 percent in Japan and North America. The global truck market is seen cut in half this year, it said.

Renschler said Daimler can be profitable selling 250,000 trucks a year, but I don't think we will stay at this level.

Daimler Truck revenue fell 33 percent to 9.2 billion euros in the first half. The division sold about 120,000 trucks in the first half of the year, down 48 percent from a year earlier. Its 2008 sales of 472,000 units compare with 516,000 in 2006.

Renschler said global sales would not return to such peak levels in the near future, so Daimler has cut back capacity. But it is not curtailing investments in emerging markets, especially so-called BRIC countries of Brazil, Russia, India and China, where substantial growth was likely.

Meanwhile, industry consolidation was likely to accelerate, and Daimler was eyeing more opportunities like its recent investment in Russia's Kamaz , the executive said.

Daimler's competitors include Sweden's Volvo , the world No. 2, and Scania , Germany's MAN SE , Japan's Hino <7205.T> and Isuzu <7202.T>, as well as U.S.-based Navistar International and Paccar
.

UNCERTAIN RECOVERY

Some peers see scant evidence of a trucking recovery.

An association of European vehicle manufacturers, ACEA, said last month there were no real signs of recovery. The heavy truck market in Europe fell almost 48 percent in the first eight months of the year, while orders in the first half of 2009 were down 85 percent from the same period in 2008.

The chief executive of French tire maker Michelin said at the Frankfurt Motor Show the truck market was still struggling. And the head of MAN's commercial vehicle group said on September 24 it will be almost impossible for the group to post a profit in the second half.

Separately, Daimler spokesman Han Tjan said the company was negotiating with former subsidiary Chrysler LLC toward resolving a legal dispute over parts, including a new axle, Chrysler needs for its new models.

We have offered a proposal and that is under negotiation, he said. Everyone wants to resolve this as quickly as possible.

Chrysler has sued Daimler, saying the German automaker has failed to honor supply contracts for parts essential for the production of key 2010 Chrysler vehicles. Chrysler, which emerged from bankruptcy in June under new management led by Fiat SpA , said it would be forced to halt production of several 2010 model-year vehicles without the components.

Daimler shares closed down 0.7 percent at 33.53 euros on Wednesday.

(Additional reporting by Christiaan Hetzner, editing by Matthew Lewis)