SWEDISH truck maker Volvo and French car parts maker Valeo posted first-quarter losses yesterday, as European industry data underlined the scale of the crisis engulfing the auto sector.

Volvo posted a larger-than-expected operating loss of 4.53 billion Swedish crowns (US$549.1 million) for the period, also cutting its market outlook, while France's Valeo pledged to step up cost-cutting after a first-quarter operating loss of 66 million euros (US$86.93 million).

"We knew that (Volvo's) figures would be bad. The question was only if they would be really, really bad, and they were," Cheuvreux analyst Patrick Sjoblom said.

Volvo shares were down 5 percent in late morning trading. Valeo shares were down 1.8 percent.

"Obviously those are levels of loss that are not sustainable. We cannot stay there," said Volvo Chief Executive Leif Johansson, referring to the operating loss. "We have in the quarter had to make, and will continue to make, dramatic reductions in production capacity."

The challenge facing Volvo - the world's second-largest truck maker - was underlined by data showing new commercial vehicle sales in Europe plunged 32.9 percent in March and 35.6 percent in the first quarter as a whole.

In a major setback after years of robust sales, the global financial crisis and ensuing collapse in demand for heavy-duty trucks has left Volvo and its peers in the European truck industry struggling to slash capacity and costs.

Volvo said order bookings in the quarter slumped 65 percent, with a drop of 71 percent in its key European market alone.

Source : internet

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