kscarbel2 Posted February 8, 2016 Share Posted February 8, 2016 Bloomberg / February 8, 2016Volkswagen AG’s heavy-truck division is exploring options for growth that could include acquisitions and an initial public offering as it seeks to reap the benefits of more independence within its rapidly reorganizing parent company.Trucks chief Andreas Renschler said in an interview that the U.S., the only major market where the unit has no significant presence, and China are among key regions for possible expansion. The strategy would challenge global industry leaders Daimler AG and Volvo AB as well as smaller rivals in emerging markets. Truck models are dramatically different in individual regions, so expansion in the U.S. would probably involve an acquisition. Renschler declined to comment on specific plans or targets.“We’re keeping all options open on our way to becoming a global champion,” Renschler said in the interview in Munich. “We want to be industry leaders in terms of profitability, customer-oriented innovations and global presence, not necessarily in terms of sales volume.”Unlike most of its passenger-car siblings, Volkswagen’s trucks unit isn’t dealing directly with fallout from the diesel-emissions scandal. Still, the crisis besetting the parent company triggered a management revamp and accelerated a push kick-started a year ago to give the automaker’s 12 brands more leeway to make their own choices, handing Renschler, who previously held the same post at Daimler, more room to maneuver.Empire Building“Shareholders would certainly welcome an IPO of VW’s trucks business as the company would start lifting value after decades of empire building” and address investor skepticism regarding conglomerates comprising passenger cars and commercial vehicles, Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note. He estimates the combined value of VW’s truck assets at about 20 billion euros ($22.3 billion).The shares fell 2.3 percent to 100.75 euros at 11:04 a.m. in Frankfurt. The company has lost almost 22 billion euros in market value since emissions cheating at its passenger-car units became public on Sept. 18.North America remains the largest undeveloped territory for the truck holding Volkswagen formed last May to better coordinate MAN, Scania AB and its namesake VW truck and bus brand.By contrast, both Daimler and Volvo enjoy large North American market shares with the Freightliner and Mack nameplates.Still, sales in that market are entering a lull because many trucks on the road were recently replaced. Volvo has revised its outlook and predicted Friday that truck industry deliveries in North America will shrink 7 percent this year. That means belt-tightening for some competitors.Good Fit“In the long-term, the North American market is of course interesting for us, but it has to be a good fit for us as well as for a possible partner,” Renschler said. He declined to comment on whether Volkswagen would be interested in buying Paccar Inc. or Navistar International Corp., the truckmaker partially owned by billionaire Carl Icahn.In China, the world’s biggest market for heavy trucks, the likelihood of a flat market this year hasn’t deterred Volkswagen from growth plans.“We’re pursuing a dual-track strategy in China,” Renschler said. Volkswagen is seeking to expand with partner Sinotruk Hong Kong Ltd. in the mass-market segment as well as boosting the higher-end business of selling its own MAN and Scania vehicles.Volkswagen is also in talks about joint projects with other peers, including the commercial truck unit of China’s FAW Group. The negotiations with FAW are separate from expansion discussions for a car joint venture the two companies also operate.Intensifying CooperationRenschler took over a few months before the truck holding was created. Hiring one of the industry’s most high-profile executives from a rival underscores the sense of urgency at Volkswagen about finally reaping financial benefits from the multi-billion-euro takeovers of MAN and Scania. That means intensifying cooperation between MAN, where a downturn in South America has eaten away at profits and a restructuring program is under way, and the smaller, higher-margin Swedish Scania unit, which has been more resilient to swings in the cyclical truck industry.MAN is cutting about 1,400 administrative jobs and 400 production jobs to lower costs as part of a revamp program to be completed next year. The program also includes a substantial expansion in digital services for truck drivers and logistics operators.Cooperation will focus on joint procurement, research, business development, finance and personnel. Volkswagen’s factory in Salzgitter, Germany, will produce non-driving axles for both brands, and the two independent assembly facilities in Russia will be combined, according to Renschler.Efficient AllianceForging an efficient alliance will play out principally in western Europe, where Scania and MAN have a combined market share of about 30 percent. Cooperation had been hampered in the past by memories of MAN’s ill-fated 2006 attempt at a hostile takeover of Scania. Volkswagen opposed the attack, then took control of both companies, buying out Scania’s minority shareholders in 2014. Overcoming cultural differences and ensuring collaboration will be crucial for the strategy to pay off. They’ll also need to weather some gloom, with Renschler predicting that Brazil, a key South American market, won’t turn around before 2018.“You don’t change corporate culture by sitting down and holding each other’s hands,” Renschler said. “You need to get people to really work together to achieve common results.” Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/ Share on other sites More sharing options...
kscarbel2 Posted February 8, 2016 Author Share Posted February 8, 2016 Renschler declined to comment on specific plans or targets. “We’re keeping all options open on our way to becoming a global champion.”Translation: VW is sweating bullets over how they're going to pay US$45 to 90 billion to cover the diesel emissions scandal, and Scania is the only brand of meaningful value that anyone would buy in today's economic situation. Though it will kill Renschler to see his one profitable truck unit sold off, VW has few options. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323448 Share on other sites More sharing options...
james j neiweem Posted February 8, 2016 Share Posted February 8, 2016 Who would be potential buyers of Scania? Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323458 Share on other sites More sharing options...
TeamsterGrrrl Posted February 8, 2016 Share Posted February 8, 2016 The emissions scandal in the U.S. is getting more expensive- VW is buying back dealer inventories of used LNT only diesels from 2009-14. That suggests that VW will voluntarily or by force have to buy back the same cars from consumers, and there's around 400,000 of them out there. Thus VW may want to turn the truck side of the conglomerate into cash to fund a recovery from the diesel emissions debacle. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323484 Share on other sites More sharing options...
RoadwayR Posted February 8, 2016 Share Posted February 8, 2016 Renschler declined to comment on specific plans or targets. “We’re keeping all options open on our way to becoming a global champion.”Translation: VW is sweating bullets over how they're going to pay US$45 to 90 billion to cover the diesel emissions scandal, and Scania is the only brand of meaningful value that anyone would buy in today's economic situation. It will kill Renschler to see his one profitable truck unit sold off.A very good analysis. It is also against a backdrop of the advantages of separating VW's passenger car/light truck operations from commercial vehicles. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323499 Share on other sites More sharing options...
Dirtymilkman Posted February 8, 2016 Share Posted February 8, 2016 I read that VW already put 8 billion aside to buy back cars. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323529 Share on other sites More sharing options...
kscarbel2 Posted February 9, 2016 Author Share Posted February 9, 2016 After the scandal was at first publicly announced last September, VW set aside $8 billion. More recently, with all banks having cold feet toward them, VW had to approach no less than 13 banks to get a US$21.3 billion (Euro 20 billion) line of credit.US$28 billion is far less than they're going to need.Who would buy Scania? In Sweden, Investor AB and/or the Wallenberg family.Outside Sweden, a Chinese truckmaker, or possibly Navistar led by a gutsy Icahn.Icahn, if he wants to, can easily raise the cash. "Davids" do acquire "Goliaths" from time to time......it's all a matter of having the right supporters.Scania would rather be owned by Americans than the Chinese. And, it would allow Scania to become global, participating once more in the only market they're not currently in today. Scania designs and produces the best drivetrains in the world. Navistar would benefit tremendously from Scania's advanced R&D expertise, particularly at a time when Navistar has lost so much R&D talent. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323549 Share on other sites More sharing options...
TeamsterGrrrl Posted February 9, 2016 Share Posted February 9, 2016 IIRC, Navistar is in trouble with EPA and CARB over emissions failures too. The numbers are a lot smaller than VW's, but Navistar is a lot smaller company. Thus Navistar is considered toxic by potential buyers and remains unsold, despite it's low stock price. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323587 Share on other sites More sharing options...
kscarbel2 Posted February 9, 2016 Author Share Posted February 9, 2016 On 2/9/2016 at 11:49 AM, TeamsterGrrrl said: IIRC, Navistar is in trouble with EPA and CARB over emissions failures too. The numbers are a lot smaller than VW's, but Navistar is a lot smaller company. Thus Navistar is considered toxic by potential buyers and remains unsold, despite it's low stock price. I believe the EPA can't do more than give Navistar a slap on the wrist, because Ustian obediently volunteered his company to run with the EPA's MEGR technology. Had it worked, they would have succeeded with the EPA having paid much of the development costs (actually John Q. Taxpayer). The EPA has a long history of funding technological development, at the taxpayer's expense, and coming up with few results. The EPA's years of funding EGR development, for example, was a waste of money (http://www.bigmacktrucks.com/index.php?/topic/40932-epa-accuses-navistar-of-clean-air-act-violations-with-big-diesels/?hl=megr#entry296787). Has their funding made the American truck engine makers stronger.......no. We only have one left, Cummins, and they're behind the curve. Cummins appears quite busy at being politically correct, rather than on designing the world's best truck engines. It's just a matter of time............. http://social.cummins.com/celebrating-womens-history-month-positively-impacting-community/ http://social.cummins.com/celebrating-womens-history-month-fostering-inclusive-workplace-nursing-mothers/ http://social.cummins.com/celebrating-womens-history-month-effects-inclusive-work-environment/ http://social.cummins.com/celebrating-womens-history-month-maintaining-diversity-workplace/ http://social.cummins.com/celebrating-womens-history-month-fostering-acceptance-workplace/ http://social.cummins.com/celebrating-womens-history-month-valuing-inclusive-work-environment/ http://social.cummins.com/celebrating-womens-history-month-feeling-pride-inclusive-work-environment/ http://social.cummins.com/celebrating-womens-history-month-embracing-diverse-perspectives/ http://social.cummins.com/celebrating-womens-history-month-diverse-workplace/ http://social.cummins.com/celebrating-womens-history-month-commitment-core-values/ http://social.cummins.com/cummins-named-breastfeeding-friendly-workplace/ http://social.cummins.com/celebrating-black-history-month-importance-inclusive-workplace/ http://social.cummins.com/celebrating-black-history-month-fostering-acceptance-global-markets/ http://social.cummins.com/celebrating-black-history-month/ http://social.cummins.com/celebrating-black-history-month-working-inclusive-environment/ http://social.cummins.com/womens-conference-empowers-female-leaders-connect-inspire/ http://social.cummins.com/cummins-supports-united-nations-womens-empowerment-principles/ Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323595 Share on other sites More sharing options...
RoadwayR Posted February 9, 2016 Share Posted February 9, 2016 (edited) First sentence under "Good Fit".That sticks out to me, the part about North America being a good fit for VW- "AS WELL AS A POSSIBLE PARTNER". Seems to infer the 'possible partner' is not in North America at present.Iveco, anyone? Edited February 9, 2016 by RoadwayR Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323596 Share on other sites More sharing options...
kscarbel2 Posted February 9, 2016 Author Share Posted February 9, 2016 First sentence under "Good Fit".That sticks out to me, the part about North America being a good fit for VW- "AS WELL AS A POSSIBLE PARTNER". Seems to infer the 'possible partner' is not in North America at present.Iveco, anyone?Sergio certainly needs the money. But buying Iveco would hold no benefit. There's a total overlap in products, and they already compete in the same markets.I know a number of Iveco engineers. The truckmaker is a labor of love for the Italians. Today, they build a very impressive lorry. Quote Link to comment https://www.bigmacktrucks.com/topic/43931-vw-trucks-chief-open-to-ipo-deals-in-expansion-strategy/#findComment-323597 Share on other sites More sharing options...
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