Shares in European truck manufacturers experienced a downturn on Thursday following the U.S. Environmental Protection Agency’s (EPA) announcement to reverse the Biden administration’s vehicle emissions rules. This decision is expected to impact pre-buying activity.
European truck sales slowed last year after a record 2023. Analysts had anticipated fleet firms would “pre-buy” trucks in the latter half of this year and in 2026, anticipating the emissions rules’ enactment. However, that expectation has diminished.
“Given the EPA’s latest comments, the market likely assumes the market now expects the tighter regulations to be reversed, meaning there is no longer an expectation of a pre-purchase surge,” stated Pal Skirta, an analyst at German broker Metzler, as reported by Reuters.
According to Reuters, Skirta and a spokesperson for Daimler Truck (DTGGe.DE) attributed the decline in share prices mainly to the EPA move. Daimler Truck experienced the largest drop, falling 5%, and was the worst performer on Germany’s blue-chip index (.GDAXI). “Our top management will elaborate in more detail on the subject tomorrow during our annual results conference,” the spokesperson said.
Arne Rautenberg, a fund manager at Union Investment, which owns shares in Daimler, told Reuters that the rollback would restrict the anticipated buying cycle and lower expectations, at least for 2025. Rautenberg emphasized, “This announcement is bad news not just from an ESG perspective, but also from a fundamental perspective.”
The EPA is also reconsidering a 2022 rule aimed at drastically cutting smog- and soot-forming emissions from heavy-duty trucks, citing increased truck expenses as a concern.
The United States is a crucial market for Daimler, which has significantly invested in emission-free drive systems to meet climate protection goals and associated regulations. Volvo Group (VOLVb.ST), a Swedish competitor, considers North America its second-largest market, contributing over 30% of net sales.
As of 1233 GMT, shares of Volvo and Germany’s Traton (8TRA.DE), a Volkswagen subsidiary, were both down approximately 3%. A Volvo spokesperson declined to comment on the potential regulation change or its impact on demand, calling both scenarios speculative at this time. However, the spokesperson added that Volvo is monitoring the political process. “It is normally much cheaper to produce in a demand-driven economy rather than a politically-driven economy,” the spokesperson noted.
This article was reported by Paolo Laudani and Ozan Ergenay in Gdansk, with additional reporting from Ilona Wissenbach, Marie Mannes, and Zuzanna Szymańska. The editing was handled by Alun John and Kirsten Donovan.
