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Scania CEO sees Europe truck market shrinking 10 percent

06/02/2012 | 04:19pm US/Eastern

Scania (>> Scania AB) Chief Executive Leif Ostling, who will leave the position to join the board of majority-owner Volkswagen (>> Volkswagen AG), told Reuters on Saturday he expects the European truck market to shrink by about 10 percent this year.

Scania (>> Scania AB) Chief Executive Leif Ostling, who will leave the position to join the board of majority-owner Volkswagen (>> Volkswagen AG), told Reuters on Saturday he expects the European truck market to shrink by about 10 percent this year.

He said truck markets had not changed much since Scania reported on its first quarter in April and his outlook for the European market, Scania's biggest, was in line with the drop forecast by Volvo (>> AB Volvo).

"It's tough still, in general and in Europe," he said. "We gave roughly the same figure as Volvo did for the European market. We haven't changed that (view)," Ostling said.

Last year, the total market for heavy trucks among 25 European Union countries plus Norway and Switzerland was 241,200 units.

Ostling predicted in April that the market would shrink to between 200,000 and 220,000 units this year as the euro zone crisis dampened demand in the highly cyclical heavy-duty truck business.

Earlier on Saturday, Volkswagen reasserted control over its wayward trucks brands with an extensive overhaul of senior management that included the appointment of Ostling. His job will be to push through a closer alliance between Scania and MAN Group (>> MAN AG), also owned by the German carmaker.

"(My task will be) to coach the different co-operations and to urge on that sensible cooperations emerge between Scania, MAN and Volkswagen ... and make sure we reach results."

Scania and MAN have been holding talks on bringing their operations closer together.

"Within purchasing, development, and also within methodology within production and logistics there's a lot to do, first and foremost to learn from each other," Ostling said on Saturday.

"At the same time, these three companies are also competitors ... we have to continue to work with separate brands, to keep these identities crystal clear."

Ostling said he did not see Scania and MAN as one merged company at any point in time.

He said the work of joint working groups created a couple of years ago to boost co-operation between the companies was progressing, however slowly.

"We work with very complicated industrial products and it takes a lot of time to dig into all the details. It takes time, but at the same time we have found several interesting parts," he said.

"But it's all relatively small, not so much money per unit, but multiplied by volume it renders quite a lot of money. So, we have already picked up synergies."

He said another benefit seen already from the co-operation was that suppliers had become more careful about raising prices, or had even lowered prices, on components.

"That too is a form of synergies," he said.

Ostling, who will be replaced in September as CEO of Scania by company veteran Martin Lundstedt, said the process of bringing Scania and MAN closer together was not a short-term one.

"This is a process that will surely continue in the coming 10 or 15 years."

(Reporting by Anna Ringstrom; Editing by Pravin Char)

Stocks treated in this article : MAN AG, Scania AB, AB Volvo, Volkswagen AG
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