Navigating Trade Turbulence: Daimler Truck's Revised 2025 Forecast and the North American Challenge

Daimler Truck AG's recent revision of its 2025 profit forecast underscores the growing fragility of the global commercial vehicle industry, particularly as North American protectionist policies and market uncertainty reshape the competitive landscape. The company now expects adjusted EBIT for 2025 to range between €3.6 billion and €4.1 billion, a 15–23% drop from the €4.7 billion recorded in 2024. This marks a stark departure from earlier expectations of only a 5% decline, reflecting the deepening impact of a slowdown in North American demand, production cuts, and the ripple effects of U.S. tariff policies.

The North American Perfect Storm

The U.S. and Canadian markets, long critical to Daimler's profitability, are now mired in a perfect storm of trade tensions and economic headwinds. Daimler's North American Class 8 truck sales guidance has been cut to 135,000–155,000 units for 2025, down from 155,000–175,000 units previously. This decline is driven by a combination of factors:
1. Tariff Uncertainty: The Trump administration's 25% tariffs on non-U.S. content in auto imports, even for USMCA-compliant goods, have forced manufacturers to recalibrate supply chains. Daimler, which relies on cross-border parts sourcing, now faces higher production costs and reduced flexibility.
2. Retaliatory Measures: Canadian and Mexican tariffs on steel and aluminum imports have further strained input costs. For context, the American Trucking Associations estimate that steel and aluminum tariffs alone have increased equipment costs by 8–12% for manufacturers.
3. Demand Deterioration: A 250,000–280,000 unit forecast for the North American Class 8 market (down from 260,000–290,000 units previously) signals a prolonged downturn in fleet orders, driven by economic stagnation and reduced freight volumes.

Strategic Adjustments: Resilience in a Shifting Landscape

Daimler's response to this volatility highlights a recalibration of long-term priorities. The company is doubling down on cost efficiency, modular technology, and market diversification:
- Cost Optimization: Daimler's “Stronger 2030” strategy aims to generate €1 billion in cost savings in Europe by 2030, leveraging automation and supply chain rationalization. This is critical for offsetting North American margin pressures.
- Modular Tech Focus: A joint venture with Volvo Group (Coretura) is accelerating the development of software-defined vehicle platforms, enabling continuous fleet updates and reducing reliance on hardware-driven innovation. This approach aligns with the industry's shift toward service-based revenue models.
- Diesel-Centric Strategy: Despite global electrification trends, Daimler has paused heavy investment in battery-electric trucks in North America. The company cites inadequate charging infrastructure and economic unfeasibility, a pragmatic move given the U.S. government's limited support for zero-emission incentives.

The Long-Term Outlook: Challenges and Opportunities

While Daimler's 2025 forecast is grim, the company's strategic agility positions it to outperform in the medium term. The Industrial Business (IB), which includes truck production, is expected to deliver a 7–9% adjusted ROS in 2025, outpacing the previous 8–10% range. This resilience stems from disciplined pricing and a focus on high-margin vocational trucks, which account for 24% of North American sales.

However, the broader industry faces systemic risks. The U.S. Section 232 investigations into truck imports and the potential for new tariffs could further disrupt supply chains. For example, a 25% tariff on imported trucks would disproportionately affect European manufacturers like Daimler, which exports 45% of its North American production.

Investment Implications

For investors, Daimler's revised forecast and strategic adjustments present a nuanced outlook:
1. Short-Term Caution: The company's 2025 EBIT range implies a 15–23% earnings contraction. Shareholders may test this threshold, particularly if U.S. tariffs escalate.
2. Long-Term Resilience: Daimler's focus on cost discipline, modular tech, and high-margin vocational trucks could drive a rebound in 2026–2027. The “Cost Down Europe” program and Coretura's software innovations are key catalysts.
3. Dividend and Buybacks: The €2 billion share repurchase program and 40–60% dividend payout ratio provide downside protection, making Daimler a defensive play in a volatile sector.

Conclusion

Daimler Truck's revised 2025 forecast is a microcosm of the broader challenges facing global manufacturers in an era of trade fragmentation. While North American protectionism has eroded short-term margins, the company's strategic pivot toward cost efficiency and modular innovation offers a path to long-term resilience. Investors should monitor the 2026 USMCA review and U.S. tariff policies, as these will determine whether the industry stabilizes or descends further into protectionist chaos. For now, Daimler's disciplined approach and strong balance sheet make it a compelling, albeit cautious, long-term holding.