Daimler, The World’s Biggest Truck Maker, Says Chip Shortage Is Easing

World’s Biggest Truck Manufacturer Says Chip Crunch Easing

(Bloomberg) -- Daimler Truck Holding AG sees promising signs of moving past the prolonged chip shortage that has beset manufacturers globally, the head of the company's Mercedes truck brand said.

After months of factory outages due to the component shortfalls, the order backlog is keeping factories busy even as the global economy shows signs of sputtering, Karin Radstrom, who also leads the truckmaker's business in Europe and South America, said in an interview. The world's biggest truckmaker has so far also evaded disruption from coronavirus lockdowns in China, she said.

“It's better, it's not perfect, but it's better than last year,” Radstrom said in an interview. “I try to not celebrate too early, we're still monitoring the situation closely.”

Manufacturers like Daimler Truck -- which also counts the Freightliner, Western Star and Fuso brands -- and peer Volvo Group have had to curtail output as plants globally couldn't source enough of the high-tech components even as demand for transport boomed. Radstrom's comments echo an assessment from Mercedes-Benz AG production chief Joerg Burzer this week who said the chip crunch was no longer causing serious production stoppages.

A global shortage of trucks contributed to a jump in shipping rates as companies raced to restore depleted inventories. While warnings over the health of the global economy are intensifying, Radstrom said there was no signs yet of a slowdown in truck manufacturing, typically a sector that's sensitive to downturns.

“There's still very, very high demand relative to supply,” Radstrom said. “Despite the changes in the economy, we don't see any downturn in demand. It can change very quickly, however.”

Daimler Truck, which split from from Mercedes last year, is working to improve margins after historically struggling to turn unrivaled industrial scale into returns matching the likes of Volvo and Paccar Inc. Meanwhile, electric-vehicle specialists including Tesla Inc. and Nikola Corp. are plotting inroads into the trucking market amid the global crackdown on transport emissions.

Daimler Truck's zero emissions strategy focuses on developing battery-powered trucks for shorter journeys and hydrogen fuel-cell models for longer stretches. The manufacturer last year started production of its electric eActros vehicle in Germany. Orders for battery big rigs rose to 619 in the first quarter of 2022 compared to 169 in the same period of 2021.

“Infrastructure has to be sped up,” Radstrom said of challenges facing the company's push to accelerate its electrification strategy. “We also need to know where the electricity and green hydrogen will come from. I'm in favor of carbon pricing to speed it up.”

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