Daimler Chrysler's Freightliner Division ramped up production and dramatically offered aggressive trade back deals to boost market share. But this decision flooded the market with new rigs leading to oversupplies of high quality used heavy duty trucks and hurting demand for new heavy trucks. These moves only hurt industry profits for all players because heavy duty trucks is the most profitable segment. Industry players are trying to beef up their service andfinancing operations to help their ailing profit margins in the main truck business. But financial risk would shift from truck companies lesees to truck manufacture lessors.
Industry is Forced to Consolidate.
The slow down in truck sales is forcing industry players to consolidate. In 2000, Volvo 's North American operation agreed to purchase Renault S.A. U.S. truck business, Mack Truck Division. Inc. Also, Volkswagen SKG acquired a controlling stake in Swedens Scania. The industrial goods sector is plagued by overcapacity which curtails demand for machinery and equipment. A slow global recovery could make this industry look very promising especially with an uptick of growth from pacific rim economies.