Volkswagen’s commercial vehicle subsidiary, the  Traton  Group has  delivered a strong performance in the third quarter posting robust overall growth in the first nine months of the year in what  the company points out ‘remains a challenging environment’.

In the period from January until September  Traton’s unit sales rose by 11 per cent to 217,100 vehicles despite a six-week production stop at MAN Truck and Bus and the delays in delivering some vehicles caused by supply chain and logistics bottlenecks.

The Group reported that  sales revenue grew 32 per cent to €28.5 billion. Traton saw significantly positive effects from its price and product mix as well as the continued strong growth in the service business, which made a considerable contribution to the company’s success with a share of 22 per cent of total revenue.

Traton said it is reaping the rewards of its successful strategy to expand its global footprint by entering the North American market with its US subsidiary, Navistar. Traton’s Financial Services segment lifted its sales revenue by 37 per cent to €933 million in the first nine months of 2022, which also playing a part in this positive development.

Incoming orders in the first nine months of 2022 were down 5 per cent year-on-year with around 256,200 vehicle orders being inked. Traton said that due to high order backlogs accompanied by long delivery times caused by limited component availability, MAN Truck and Bus, Navistar, and especially Scania were all highly restricted in their acceptance of truck orders as a result.

This approach also aims to ensure that the Company takes adequate measures to account for the continued increase in costs, especially for raw materials, energy, bought-in components, and logistics services. Triton’s  Operations business area posted a book-to-bill ratio (the ratio of incoming orders to unit sales) of 1.2, after a figure of 1.4 in the prior-year period.

The  Group’s adjusted operating result grew slightly year-on-year to €1,347 million despite substantial effects from supply bottlenecks and the associated lower capacity utilisation, as well as the production stop at MAN. Price adjustments and positive effects in the product and market mix offset the negative impact of the increased prices for raw materials, energy, and primary products.

Traton reported that adjustments of €738 million were made in the first nine months of 2022, primarily in connection with the war in Ukraine. This figure also included losses in connection with the sale of business activities in Russia, which was announced in September 2022. The adjustments of €681 million made in the prior-year period related to the repositioning of MAN.

 “Our current lead times for orders are reaching up to a year, because our order backlog is so high, we have become restrictive in our order acceptance,” said Christian Levin, the CEO of the Traton Group.

“At the same time, customer demand remains strong as their fleets get older and transportation capacity continues to be sought after, and right now, our customers are even placing orders for twelve months down the line,” Levin added.

“The whole Group has delivered a robust performance in what remains a challenging environment, and we are making great strides when it comes to modularisation and the exchange of state-of-the-art technology between our brands,” he said.

“Navistar launched the CBE, the Group-wide powertrain, in August, and Scania already uses this extremely efficient 13-litre engine, while MAN will bring it to market in 2024,” Levin added.

“The conversations I had at the IAA Transportation are also making me optimistic, as customers showed a lot of interest in the new battery electric trucks that Scania and MAN presented in Hanover”.

“You can tell that from our order book: our customers ordered well over 1,600 electric vehicles in the first nine months. And their interest will keep on growing once the development of charging infrastructure gains momentum,” Levin said.

“Battery electric commercial vehicles cannot become the mainstream solution for long-haul transportation and do so quickly, unless fast-charging infrastructure is established as soon as possible,” he added.

“The Traton Group reached a milestone in this area with the foundation of its joint venture together with Daimler Truck and the Volvo Group. Right now, there are hardly any charging points for electric heavy-duty trucks or buses that can be accessed by the public. The joint venture intends to establish and run at least 1,700 green energy charging points in Europe over the next five years,” the Group CEO concluded.

According to the Traton Group CFO Annette Danielski, the supply chain and logistics situation is continuing to pose challenges, but the Group is tackling these challenges head on.

“We are making real progress in restoring our production to its normal level, and we were largely able to offset the significantly higher prices for energy, raw materials, and other bought-in parts as well as for logistics services through higher vehicle prices,” said Danielski.

“We are still expecting a substantial increase in the Traton’s unit sales of all vehicles, including MAN TGE vans, in 2022, while we are also still anticipating a very sharp increase in sales revenue overall,” she said.

“Additionally  we have confirmed our forecast for the adjusted operating return on sales, which we expect to range between 5.0 and 6.0 per cent, and at the same time, our market environment remains extremely uncertain, which is why we are keeping a very close eye on political and economic risks — so that we can act quickly,” said Danielski.

Traton’s forecast for fiscal year 2022 also contains earnings effects from its Navistar purchase price allocation, however, it remains impossible to predict the effects of the continuing supply chain bottlenecks, possible energy shortages, and the further course of the war in Ukraine with sufficient certainty, the company said.

As a result it says  the risk remains that as the issues evolve, they may have a negative impact on the  Group’s business activities, while negative effects may still arise if the COVID-19 situation were to deteriorate once more, bringing with it further supply chain difficulties, Traton said.