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7 Nov, 2008 06:49

Outlook puts skids under truck production

A controversial report by Gaz leaked to Business Today reveals Russia’s number two carmaker fears sales next year will collapse 50%.The news comes as the world’s number two truckmaker Volvo admits it will cut production at its new Russian plant.

Volvo opens its first Russian factory here early next year with capacity for 15,000 trucks. The plant assumes Volvo's annual sales growth of 85 per cent in Russia to last year. But trucks have reversed into the slowest movers of the auto industry. Most are bought on loans that banks are no longer keen to give.

Lars Corneliusson, CEO of Volvo Vostok admitted its new plant now won't work to capacity.

“There is no need to produce trucks if trucks are not demanded, so in that respect we would assume a slower ramp-up than otherwise.”

With double digit production cuts by Russia's miners and energy firms, experts fear sales of the industrial vehicles they use will slump according to Elena Sakhnova, Transport analyst at VTB Capital.

“We definitely expect to see negative growth already this year, and next year the decrease can be much more, around 20 per cent for trucks.”

In an internal report leaked to Business Today, the maker of Russia's ubiquitous yellow minibuses Gaz said sales next year will halve. To protect them the government's set to up duties on foreign trucks from 10 per cent to 15 per cent.

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