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Volvo truck sales rise on economic gains

July 26, 2005|by DANIEL J. SERNOVITZ

daniels@herald-mail.com

Triggered by increases in freight and home construction, AB Volvo upgraded its sales estimates to 20 percent for its North American truck lines Monday, the Swedish truck maker and engineering company reported with its second-quarter-earnings report.

While the report indicated weak sales in Europe, where the company's market growth estimate was unchanged from earlier estimates of 0 percent to 5 percent, the company strengthened its North American market estimates from between 15 percent and 20 percent to a solid 20 percent.

Bob Martin, spokesman for Volvo Group subsidiary Mack Trucks Inc., said economic gains coupled with an increase in freight shipments and new construction led to strong sales in the United States. As a result, he said, the company boosted production last month at its Macungie, Pa., plant, which is now making about 90 trucks a day.

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"The economic conditions are very favorable," Martin said. "We have increasing amounts of retail sales so freight is high and our customers are in need of vehicles."

In addition to its line of freight trucks, Martin said Mack is experiencing strong sales in its construction and refuse-collection lines of vehicles. Martin did not know whether production increases are having an impact on Volvo's powertrain plant in Hagerstown, which makes powertrains for Volvo and Mack engines.

In a press conference Monday, Volvo CEO Leif Johansson said he was disappointed by the European sales numbers and that he expected those figures to be bolstered by increased sales in the United States.

Overall, the company reported a 40 percent increase in income for the first six months of 2005, though Volvo stock prices fell 5.7 percent in response to the weaker projections in the European market.

"Demand for trucks is increasing in North America and softening at a high level in Europe," Johansson said in comments accompanying the company's second-quarter earnings. "The trend from the first quarter thus continued. This means that we are adapting production rates to different prerequisites. In Europe, we are reducing rates, while they are being ramped up in North America."

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