World number two truck maker Volvo said on Wednesday it expected its key European truck market to revive only gradually this year from its worst downturn in decades.
The global financial crisis in late 2008 cut off access to easy credit for vehicle purchases and pushed economies across the world into recession, plunging the highly cyclical heavy-duty truck market into a steep decline.
Our assessment at the moment is that the truck market in Europe will gradually improve during this year, Volvo Chief Executive Leif Johansson said in the text of a speech for the group's annual shareholder meeting.
But the vehicles fleet is relatively young and the need for new purchases is currently low, he added.
Demand in emerging markets has since revived, prompting Volvo rival Scania to release much stronger quarterly earnings than expected earlier this week on strength in its biggest market Brazil, but activity in Europe and North American remains sluggish.
Volvo, which has less relative exposure to the booming Brazilian market but makes and sells trucks in the United States, said it expected demand in North America to pick up toward year-end.
Our estimate is, however, that the North American market will remain weak during the first half of 2010 and improve during the latter part of the year, Johansson said.
Considering that the average age of heavy trucks (in North America) is above 8 years, it is somewhat surprising that the development has not turned around yet.
Volvo, due to release its first-quarter report April 23, has said it will raise output to reflect stronger orders and sees market growth this year of about 10 percent in Europe and about 20-30 percent in North America.
(Reporting by Victoria Klesty; writing by Niklas Pollard; Editing by David Cowell)