And here comes MAN with its Q2 results, but, more significantly, yet more to suggest that the growth spurts in both Russia and Eastern Europe are now over.
Headline numbers are good, as one would expect. Net income rose to €446 million ($694 million), or €3.01 a share, from €440 million, or €2.98 per share, a year earlier, the company said today in a statement. Profit beat the €414 million median estimate of six analysts surveyed by Bloomberg News.
But here's the kicker. MAN is to delay the expansion of its Cracow Plant, established last year and representing an investment of €100 million. MAN itself says that momentum has slowed in Eastern Europe, but remains 'dynamic' in Russia. It may be dynamic for MAN, but we hear of another OEM that has seen its order intake drop by in excess of 25 per cent in Russia so far this year.
We're not really sure about how to take this. Granted, that OEM may be suffering to the benefit of the other European players, and this may be a reflection of a single lost order, given the current relatively small size of the overall Russian new import market against the relatively large size of the orders placed therein. Alternatively, and we think more likely, this could also be an indication that the first tranche of Russian truck market development, which has seen Euro V vehicles being specified for European operations has now finished, and the market preference is now for second life trucks both from the EU and North America; Freightliner apparently outsells Mercedes-Benz in the Russian second hand market at present. The third possibility, and one that runs entirely counter to the bullishness we hear on an almost daily basis is that demand for trucks in Russia is now fading. That would not be good, especially if Eastern Europe too is now heading for a stagnant period.
And if the Russian appetite for new European-built trucks is fading, then what does this say not just about MAN's Cracow operation, but, more pertinently, AB Volvo's combined Volvo Renault facility at Kaluga? Both represent €100 million worth of invest, both have to be paid for, and yet both may yet prove to be supplying a market that is turning its back on their respective products.
