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The Company’s new truck deliveries are summarized below: 

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The truck market in the U.S. and Canada in 2011 improved from the recessionary levels of 2010, reflecting higher freight volumes and the need to replace an aging truck fleet. Industry retail sales in the heavy-duty market in U.S. and Canada increased to 197,000 units in 2011 compared to 126,000 units in 2010. The Company’s heavy-duty truck retail market share was a record 28.1% in 2011 compared to 24.1% in 2010, reflecting overall strong demand for the Company’s premium products and increased deliveries to large fleet customers. The medium-duty market was 61,000 units in 2011 compared to 41,000 units in 2010. The Company’s medium-duty market share was 12.4% in 2011 compared to 13.5% in 2010. 

The 15-tonne and above truck market in Western and Central Europe was 244,000 units compared to 183,000 units in 2010. The Company’s market share was a record 15.5% in 2011 compared to 15.2% in 2010, reflecting improvement in the U.K., Germany and Central Europe. DAF market share in the 6- to 15-tonne market in 2011 was 8.9%, compared to 7.7% in 2010. The 6- to 15-tonne market in 2011 was 57,000 units, compared to 51,000 units in 2010. 

Sales and revenues in Mexico, South America, Australia and other markets increased in 2011 primarily due to higher new truck deliveries in Mexico and the Andean region of South America. 

The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin between 2011 and 2010 follow: 

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• The higher truck delivery volume reflects improved truck markets and higher market share. The increased demand for trucks also resulted in higher average truck sales prices which increased sales by $567.7 million. 

• Cost of sales increased $303.4 million due to a higher average cost per truck, primarily from the effect of EPA 2010 engines in the U.S. and Canada. 

• Factory overhead, warehouse and other indirect costs increased $273.6 million primarily due to higher salaries and related costs ($169.4 million) and manufacturing supplies and maintenance ($84.8 million) to support higher production levels. 

