Scania trucks pass a building yard in Moscow. Scania’s assembly plant near St Petersburg accounts for about 20% of its sales in Russia.

Bloomberg/Moscow

Scania AB, the largest foreign seller of heavy trucks in Russia, is forecasting that the country’s commercial-vehicle market will bounce back sharply in 2016 after shrinking by half this year as a recession looms.
The Swedish manufacturer, while scaling back production, doesn’t plan to shutter its Russian plant, Hans Tardell, managing director of Scania’s business in the country, said in an interview in Moscow. Truckmakers from Europe are likely to stay in the local market, he said.
“We think that the recovery will be as quick as the current decline,” Tardell said. “We hope the market will start recovering next year, or even at the end of this year, but a lot will depend on the political situation and on oil prices.”
Gross domestic product in Russia contracted in the first quarter, the first drop since 2009, and the Economy Ministry is forecasting a decline of as much as 2.8% this year. The government has had to cut spending as revenue from oil, which accounts for about half of its budget, may be held back because of a global plunge in prices. Trade sanctions imposed by the US and Europe over the conflict in Ukraine have also hurt the economy.
Truck sales in Russia have fallen since the end of 2012 and are set to drop 50% this year following a 23% slide in 2014, according to Tardell.
Among the “absolutely terrible figures” for this year, four-month deliveries of heavy trucks by the seven largest European producers in the country plunged 62% from a year earlier, while Scania’s sales dropped 59%. Even so, as the GDP contraction hasn’t been as severe as predicted, there’s potential for recovery, Tardell said.
“The Russian economy is not in that bad shape,” he said. “It has a low unemployment level and low debt level.” Large projects such as soccer’s 2018 World Cup may support the commercial-vehicle market, Tardell said. Russia traditionally has been one of the three largest markets for Soedertaelje, Sweden-based Scania, which is owned by German carmaker Volkswagen AG. “This year, we will be happy that it will be at least in the Top 10,” Tardell said.
Scania’s assembly plant near St Petersburg accounts for about 20% of its sales in Russia. The site’s output fell 40% to 600 vehicles last year, according to the company. The manufacturer has shelved an €80mn ($89.6mn) expansion project because of the truck-market decline, Tardell said. The removal of tariffs on truck imports after Russia joined the World Trade Organisation in 2012 has also made extra local production less attractive, the executive said. Still, Scania plans to keep the St Petersburg factory operating, he said.
“We’ll stay in Russia,” he said.


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