Scania will cut production in Europe because of low demand image

Swedish truck maker Scania AB controlled by Volkswagen AG (VOW), will adjust the production rate at its units in Europe.

The background is a deceleration in demand in various markets. Compared to the end of the third quarter, at the global level this means that the vehicle production rate will be reduced by 10-15 percent.

“Government financial problems in Europe and the US have now begun to affect economic activity and have led to hesitation among customers,” the company explained in a statement, adding it was seeing “deceleration in Europe, but also a slower pace of order bookings from the Middle East.”

“In Latin America, demand has stabilised at a high level, which means that we have continued high capacity utilisation at our production units in Brazil and Argentina,” Mr Nielsen says.

The move will affect over 900 temporary employees Erik Ljungberg, Senior Vice President Corporate Relations at Scania told Dow Jones Newswires.

According to Jose Asumendi, analyst at Royal Bank of Scotland, Scania’s move is a logical defensive measure as macro data point to an economic slowdown in Europe.

The company is currently working with delivery times of about eight weeks in Europe.

Employing some 35,500 people, Scania operates in about 100 countries.