The European economy, and particularly Germany, showed the first signs of weakness around two years ago. However, business in the truck industry ran and ran, even though the industry has a reputation for being a reliable early indicator of economic ups and downs.

Buyers had to put up with exceptionally long waiting times for ordered trucks. As a result of the coronavirus pandemic and bottlenecks in ports and shipping, manufacturers were short of components. There was not only a shortage of semiconductors but also of engines, tyres and plastic parts – even screws. At times, truck manufacturers in Europe and North America only accepted orders selectively. The mountain of orders piled up higher and higher.

With order books filled to the brim, the industry enjoyed high capacity utilisation for a long time, even though orders were decreasing. The supply shortage also made it relatively easy for truck manufacturers to increase prices – and only to pass on the increased costs for materials, raw materials, energy and transport to customers. The profitability of the companies increased. The industry experienced a land of milk and honey.

After the end of this full steam ahead phase, the keyword for managers became „normalisation“. The laws of the market, with a balance of supply and demand, applied once again.

To now speak of a crisis would be an exaggeration, but the situation in the European truck market is undoubtedly tricky, especially in Germany. Things look better in North America. Asia has been weak for some time – especially China – but the region does not play nearly as important a role for the European groups Daimler Truck, Volvo and Traton as it does for the German car industry.

In Europe, the hoped-for revival in demand for trucks has so far failed to materialise in the second half of the year. Companies are reacting – not frantically, but in a targeted manner. Volvo already started to compensate for the slowdown at the end of 2023: Production and demand are apparently back in balance. German competitors Daimler Truck and Traton are utilising short-time working in Germany: the Mercedes-Benz brand at its largest plant in Wörth, MAN in Munich, Nuremberg and Salzgitter.

It remains to be seen whether this will be enough, or whether similar steps will follow in other plants. The difficulty is to predict market developments beyond three or four months.

The weak demand coincides with the shift towards alternative, emission-free drives. Similar to the car industry, this means a heavy double burden for truck manufacturers. Turnover and profits are falling, while the need for investment remains high. This is particularly true for Daimler Truck and Volvo, which are taking a two-pronged approach: For the time being, they are focussing on battery electric trucks, but in the longer term, they are also looking to the fuel cell as a drive system for trucks in heavy goods transport and on long journeys. The fact that the competitors are joining forces in a joint venture makes sense both technically and financially.

Orders for electric trucks are increasing enormously, but are starting at a low level. Of the newly registered commercial vehicles in Europe last year, only just under 7% had a battery-electric drive. In the class of trucks with a gross weight of more than 16 tonnes, the figure is just 1%. Compared to diesel vehicles, the purchase price is two and a half to three times higher. The decisive factor for customers, such as haulage companies, is the sum of the costs over the entire years of use of a truck – the so-called total costs of ownership. There is still a long way to go to achieve parity with diesel and, thus, a comparably high demand. The laws of the market also apply here.