We've shared with you in the past that South America represents our highest-margin region of the world for the Commercial Truck segment. The long-term improvements we executed this year in the form of pricing and manufacturing footprint rationalization have helped us to offset the impacts of the economic slowdowns in South America and Europe. This regional shift would have been significantly more impactful prior to the implementation of these actions.
The table in the bottom right indicates the status of our forecast for changes in Commercial Truck production volumes. At this time, Commercial Truck volumes in North America and Europe remain in line with our prior guidance. We do see some downside risk in North America, with modest upside potential in Europe. While North America remains stable, lower order intake may affect the remainder of fiscal year 2012 into 2013. We are maintaining our forecast with an increase of approximately 25% in truck volumes in North America and a decrease of 10% for Europe.
Our volume forecast in South America has further declined from our forecast last quarter. We now believe that truck production in South America will decrease more than 20% year-over-year. As I mentioned earlier, the anticipated recovery in Brazil in the second half has not occurred, which drove our forecast for the year down from what we expected last quarter.
Let's turn to Slide 5 to discuss more specifically our industry outlook for North America and Western Europe for fiscal year 2012. We expect Class 8 volumes to be 291,000 units for fiscal year, up nearly 30% year-over-year. However, we continue to closely monitor market conditions. In Class 5-7, we anticipate industry production to be at 172,000 units, up approximately 8% from fiscal year 2011. Longer-term forecast continued to show growth, but at a slightly slower rate. Current data indicate downward pressure on the build rate of Class 5-7.
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