VW strategy shuts down truck arms sale speculation

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Australasian Transport News  /  June 17, 2016

Commercial vehicles to help drive innovation as electric propulsion, not divestment, the group’s focus in the mid-term

Fevered speculation in the general business and car industry press that Volkswagen Group could shed its Scania and MAN truck-building arms came to nothing overnight.

In a major strategic response to the so-called Dieselgate emissions scandal, VW says it will focus on "battery technology, digitalisation and autonomous driving", its Together – Strategy 2025 document reveals.

Ironically, this focuses on some of the very expertise its truck arms are developing and the group emphasised the centrality of its commercial vehicles to it future.

"For its commercial vehicles business, which currently comprises the Scania, MAN and Volkswagen Commercial Vehicles brands, the Group is reaffirming its strategic goal of creating a global champion," VW says.

"The plan is for Volkswagen Truck & Bus, as a multi-brand provider across the cycle, to become the most profitable company in the sector, with a significant presence in all key regions of the globe.

"These targets are to be achieved firstly through much closer cooperation between the commercial vehicles brands and, secondly, by enhancing the group's overall performance as well as expanding its global footprint.

"New business models will also play a decisive role in this.

"In the medium term, the business unit will increasingly evolve from a purely commercial vehicles manufacturer into a provider of intelligent transportation solutions."

More strategy details for each of it brands are promised in the coming months.

"Specifically, our plan for Volkswagen Truck & Bus, as a multi-brand provider across the cycle, is to make it the most profitable company in the sector, " VW CEO Matthias Müller says in a speech announcing the new strategy.

"This will be achieved above all by faster integration in the brand alliance.

"We will significantly improve the group's overall performance and expand our global footprint – especially in the regions where we are still punching below our weight. In the medium term, the business unit will increasingly evolve from a pure-play commercial vehicles manufacturer to a leading provider of intelligent transport solutions. "

Also a strengthening suit in the commercial vehicles space is finance and this service is to be strengthened.

Under the strategic realignment, the Financial Services Division "will also be a significant source of earnings for the Group and a mainstay of its brands' success".

"Developing, building and selling vehicles, including the related financial services, will remain essential for the Volkswagen Group going forward," Müller adds.

"However, the transformation we have initiated today will permanently change the face of our core business, ensuring that we remain a leading player over both the medium and the long term."

While much of the strategy is devoted to passenger vehicles, there is a cross-over to vans.

"With regard to vehicles, and drivetrains, special emphasis will be place on e-mobility," it says.

"The Group is planning a broad-based initiative in this area: it intends to launch more than 30 purely battery-powered electric vehicles (BEVs) over the next 10 years.

"The Company estimates that such vehicles could then account for around a quarter of the global passenger car market.

"The Volkswagen Group forecasts that its own BEV sales will be between two and three million units in 2025, equivalent to some 20 to 25 per cent of the total unit sales expected at that time."

Meanwhile, Müller offered a significant acceptance of management weaknesses at the top echelon of the group.

"Volkswagen has always enriched the lives of millions of people all over the world with its brands and products. Our aspiration is to continue that success story and play a leading role in shaping auto-mobility for future generations, too, " he says.

"This will require us – following the serious setback as a result of the diesel issue – to learn from mistakes made, rectify shortcomings and establish a corporate culture that is open, value-driven and rooted in integrity."

However, in a speech announcing the new strategy, he underlined the group’s successes beyond the scandal over the past decade.

Emphasising the positive, he says Dieselgate shook the up what was "a fairly traditional company".