Scania sees China rebound, braces for Brexit hit to UK orders

by SpeedLux
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Volkswagen-owned truckmaker Scania stated on Thursday that demand in China had bounced back since the beginning of this year, but it was bracing for a potentially major drop in UK orders if Britain departs the EU under a “hard” Brexit.

Scania is part of Volkswagen’s Traton truck unit, whose planned initial public offering in April was pulled by the automaker on Wednesday until market conditions improve.

In November, Scania stated demand in China for trucks and buses dropped 10 to 15 percent from previous quarters and customers were forecasting fewer auto purchases for the next six months.

However, CEO Henrik Henriksson stated on Thursday that conditions had enhanced and Chinese demand was rebounding to the “same level” as prior the fourth-quarter downturn as rising e-commerce has led customers to restart purchasing Scania’s high-mileage trucks.

“Requests coming in from our customers especially the big ones, they tended to slow down the pace of renewing their fleet (in the fourth quarter). But it looks like now the market is coming back,” Henriksson informed Reuters by phone.

Henriksson stated Scania had observed a spike in UK orders in the fourth quarter of last year because of buying ahead of Brexit and it had rushed to deliver those orders in January and February, expecting delays at the UK border after the March end exit deadline.

“What we have also done is prepare ourselves if there would be a hard Brexit… but if it would be a hard Brexit, then we expect that the market will drop significantly,” Henriksson stated.

Scania has lengthened the times it requires to bring UK-sourced parts to production and has worked out alternative shipping routes for trucks made in Holland and Belgium to be offered in the UK.

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