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Friday, October 24, 2008

Global Growth Screeches to a Halt

"Recession or Depression?" asks The Financial Ninja:

“Volvo said it received 115 order bookings for heavy trucks in Europe in the quarter, down from 41,970 trucks a year earlier.”
Click for massive chart in order to see Q3 08 units.


From comments Sprizouse states...
The rest of the article DOES matter. Volvo cut the numbers when realigning their internal books for global heavy truck orders. Once the books were cleaned it was still shocking to see heavy truck orders, in total, down 55%... but not the ridiculous amount on the chart or the amount Bloomberg's claiming.
I'll agree with Sprizouse that there is more to the story. From Volvo's earnings call we learn from Leif Johansson, CEO, all the details of these lousy numbers:
The order intake actually netted --looks like we had a 100% fall and that of course netted and in reality we had 20,000 new orders come in, in the European business. And 20,000 new orders were then offset by around 20,000 cancellations. What happened there was that, the order book then, many of our customers decided to cancel their orders or push forward orders, even sometime in the real near-term, or you can say within the quarter.
So, it wasn't 115 total orders, but ~20,000 orders less ~20,000 - 115 cancellations. My new questions... why was Volvo booking the sales in previous quarters if they could be cancelled AND why won't customers cancel these 20,000 new orders as the global economy has gotten significantly worse?

Source: Bloomberg