DaimlerChrysler is expecting the US truck market to decline by around 40% in 2007, according to Andreas Renschler, DaimlerChrysler management board member responsible for truck group & buses, speaking on the sidelines of a conference in Detroit.

According to dpa-AFX news agency, he said that demand for medium trucks could decline by around a quarter, after 2006 saw purchases brought forward ahead of the introduction of new emissions regulations, EPA 2007. They come into effect in the USA and Canada at the beginning of next year, and will increase prices accordingly.

DaimlerChrysler's US subsidiary, Freightliner, has already started tightening its belt. Last week it announced that it would make adjustments to its production programme with as many as 4,000 workers affected. The company said that as a result of the new emissions regulations its truck prices would increase by $US4,600 to $12,500, before tax.

800 workers have already been notified that they will be laid off during the first quarter at Freightliner's St Thomas, Ontario, plant. The plant, operated by Freightliner Canada, produces the company's Sterling heavy- and medium-duty trucks.

"We will continue to monitor the market closely and make adjustments accordingly but we anticipate further reductions of up to 3,200 workers in the first few months of 2007," said Freightliner President and CEO Chris Patterson.

DaimlerChrysler is expecting the market to recover in the second half of the year as customers gain confidence in the new technology, and their existing vehicles age.

Renschler told dpa-AFX that the downturn in the market is not expected to have a significant effect on long-term financial forecasts. It is forecasting a 7% return on sales for 2007.