Volkswagen would back U.S. trucks deal, despite dieselgate

[kscarbel2]

Reuters  /  July 20, 2016

Volkswagen is ready to make an acquisition for its trucks business in North America if the right opportunity comes along, despite the rising cost of its "dieselgate" emissions cheating scandal, the head of the trucks division told Reuters.

Andreas Renschler said his main focus remained on deepening cooperation between Volkswagen's (VW) truck brands - MAN and Scania - a process started last year and aimed at saving up to 1 billion euros ($1.1 billion) a year by 2025 from joint procurement and development of gearboxes, axles and engines.

But he said VW's absence from the lucrative North American trucks market was something he wanted to address over the longer term, as he seeks to build a global business to challenge rivals Daimler and Volvo.

And he said VW management's support for such a move was as strong as before the company was engulfed in a damaging and costly scandal over cheating emissions tests last September.

"The question is whether you try to find solutions or hide away in the corner," he said. "We are looking ahead."

VW said on Wednesday it was taking another 2.2 billion euro ($2.4 billion) one-off hit in its first half results - on top of the 16.2 billion euros it has already set aside to cover the costs of its emissions test cheating, including fixing vehicles and a settlement with U.S. authorities.

Some analysts had speculated VW might sell or spin off its trucks business to help raise funds, but it made clear in a strategy overhaul in June it had no plans for major asset sales.

First-half earnings figures on Wednesday also signaled the company's recovery may be gaining momentum.

Renschler said in an interview that VW was under no pressure to do a trucks deal in the United States, adding it was important "to pick the right moment to take the right step".

He also declined to discuss potential deals. Analysts have suggested Navistar International Corp or Paccar Inc as possible acquisition targets or partners.

Renschler said a public listing for VW's trucks business was not a top priority at the moment, though all options were being kept open to that end, he added, without being more specific.

The trucks business made 24.4 billion euros of sales in 2015, out of a VW group total of 213.3 billion.

June's strategy announcement was the start of a transformation at VW that could last 5-10 years, and in which the trucks business would play its part, Renschler said.

He said VW would use the 2016 IAA Hanover truck fair on Sept. 21-22 to unveil a new platform to expand digital services for truck drivers and logistics operators.

The company may also announce new financial targets for MAN, whose profits have been hammered by a downturn in its key Brazilian market, and the higher-margin Swedish unit Scania, Renschler said.

VW is seeking to expand cooperation with Chinese partner Sinotruk Hong Kong, and is open to talks about joint projects with other peers, he added.

A former Daimler executive who joined VW in February 2015, Renschler indicated he may not seek a second term when his contract expires in 2020.

"It always depends on how I feel and whether or not I want to work operationally," the 58-year-old said. "I have a five-year contract, I have promised to fulfill it."

[DailyDiesel]

Can you just imagine a the Peterbilt red oval being replaced by the VW?

[Dirtymilkman]

46 minutes ago, DailyDiesel said:

Can you just imagine a the Peterbilt red oval being replaced by the VW?

You'd have a PeterWagon! 

[TeamsterGrrrl]

Navistar would make more sense and wouldn't face many anti-trust challenges. VW could buy Paccar, but they'd probably have to sell off DAF due to anti-trust conflicts.

[41180]

Why not buy mack . Make volvo a offer they can't refuse

[HeavyGunner]

They should just buy Kenworth. That way, they'd save money by only changing one letter on the hood emblem. 

[RoadwayR]

For a long time Navistar looked like the likely candidate, but didn't Renscher comment some time ago that VW was not necessarily looking for a large volume truck manufacturer?  One would think if Navistar was the intended target or partner VW would have moved on it by now.  You can't ignore that Navistar seems to be building a substantial relationship with GM (not a surprise considering all the ex-GM executives running NAV now) and I think we have not seen the full extent of that partnership.  PACCAR would seem to be more of the type of partner VW is looking for, but could DAF be integrated into MAN and Scania eventually?

What about Oshkosh?   

 

  

[kscarbel2]

Everything you say about Navistar is true. Navistar's "Paccar Gang" led by the superb Bill Kozek has got the company rolling again nicely, even despite the current downturn in the truck market. Meanwhile, ex-General Motors man Troy Clarke is successfully negotiating meaningful partnerships with his old employer.

Troy has stated his desire to "cooperate" with other companies where mutual synergies can be realized.........I don't sense he has the intention of pumping up the company and then selling out. And, would the DOJ allow the US to be down to just one U.S.-owned heavy truckmaker?

I don't think Paccar (Pigott Inc.) is of a mind to sell out and retire.

I see Oshkosh as being much the same way. Plus, as our nation's key military vehicle contractor, it would be virtually impossible for the DOJ to approve the sale of Oshkosh to a foreign aggressor.

 

[james j neiweem]

Volkswagon should pack their bags and head back to Germany and take Diamler and Siemans with you. Who the Hell won the war anyway.

[TeamsterGrrrl]

VW is hardly a German company anymore, half their employees are outside of Germany, same for Daimler and almost every major auto and truck maker. Navistar was simply never able to fully make the transition to being a worldwide manufacturer.

[kscarbel2]

11 hours ago, TeamsterGrrrl said:

VW is hardly a German company anymore, half their employees are outside of Germany, same for Daimler and almost every major auto and truck maker. Navistar was simply never able to fully make the transition to being a worldwide manufacturer.

Volkswagen AG is precisely a German company. AG (Aktiengesellschaft) means corporation.......VW is a "German" corporation.

Its "controlling" shareholders, the Piech and Porsche families, are the same "German" families that, in bed with their dear friend Hitler, from the early 1930s, received every war contract they could stand including the V-1 flying bomb contract. VW was the first in German industry to request slave labor from Hitler, and the largest user of slave labor during the war. In 1960, these two Nazi families wealthy from their WW2 military contracts amazingly were allowed by the German government to retake control of VW. 

The majority of VW's 600,000 employees are in............Germany.  (VW is grossly inefficient owing to Germany being a social welfare country.......while Toyota and VW build roughly the same number of cars annually, Toyota does it with 300,000 people while VW has over 600,000 people).

[RoadwayR]

Good point about Oshkosh's military business.

[james j neiweem]

Navistar also has a big military presence

 

[kscarbel2]

1 hour ago, james j neiweem said:

Navistar also has a big military presence

I'm thrilled that Navistar has a stake in the U.S. military truck segment. I don't like Oshkosh having a near monopoly. But in fact, Oshkosh does have the big chunk of Pentagon business.

I want our boys to have the best trucks, and the U.S. taxpayer to get the best all-around deal while achieving that goal. That said, I wish that Navistar had secured the JLTV (hummer replacement deal) rather than Oshkosh. I like to spread out the business amongst several "American" suppliers for safety's sake. Now, OSK has too much.

For the record, I'm deeply invested in both companies.

[RoadwayR]

On 7/22/2016 at 0:46 AM, kscarbel2 said:

Troy has stated his desire to "cooperate" with other companies where mutual synergies can be realized.........I don't sense he has the intention of pumping up the company and then selling out. And, would the DOJ allow the US to be down to just one U.S.-owned heavy truckmaker?

 

I agree, but there is Navistar's debt issue.  It makes them vulnerable.  Better to agree on a deal with beneficial terms rather than be taken over with your back against the wall. 

[kscarbel2]

2 hours ago, RoadwayR said:

I agree, but there is Navistar's debt issue.  It makes them vulnerable.  Better to agree on a deal with beneficial terms rather than be taken over with your back against the wall. 

Despite the North American market slowdown, Navistar is getting airborne again.

At the same time, look at Volvo, floundering with new excuses every month as they lay off more and more U.S. workers.

The two "American" truckmakers, Paccar and Navistar, haven't laid off anyone. Paccar is doing great.

[41chevy]

Navistar also has their military contracts although I'm sure the powers that be would see no problem with a foreign company owning them. I would lean more to Volvo divesting themselves of MACK to VW since Volvo seems to have gotten all the needed.   Paul

[kscarbel2]

Volvo is in serious financial straights right now. Aside from their US truck market being in the toilet owing more to incompetent management than macroeconomics, the money-losing Volvo Construction Equipment unit is pulling them under. The board is of a mind to sell, but with the market down, they wouldn't get much for it.

[Red Horse]

50 minutes ago, 41chevy said:

Navistar also has their military contracts although I'm sure the powers that be would see no problem with a foreign company owning them. I would lean more to Volvo divesting themselves of MACK to VW since Volvo seems to have gotten all the needed.   Paul

Can't imagine that would happen given dependency on Hagerstown for drivetrain??  Would Like to see it happen but seems like they have done too good a job of integrating Mack power into the mix?

KSC-what do you think?

[kscarbel2]

7 hours ago, Red Horse said:

Can't imagine that would happen given dependency on Hagerstown for drivetrain??  Would Like to see it happen but seems like they have done too good a job of integrating Mack power into the mix?

KSC-what do you think?

The Swedish government would like to see D11 and D13 engine production return to Sweden. And for Gothenburg, Sweden-based Volvo, relocating that engine production back to Sweden would be a very politically correct thing to do. The government would smother Volvo with financial incentives.

Volvo engine production is NOT limited to the former Mack Trucks facility in Hagerstown, Maryland.

In addition, Volvo produces engines in:

Skövde, Sweden              Euro-6 D13 and global D16

Lyon-Venissieux, France  Euro-6 D5, D8, D9 and D11)

Curitiba, Brazil                 Euro-5 D11 and D13

Pithampur, India              Euro-3 and Euro-4 D5 and D8

Ageo, Japan                      GH5, GH7, GH8, GH11, GH13 (Nissan Diesel-developed D5/D8 and rebadged D11/D13)

Volvo could also negotiate to produce engines at the 55/45 Dongfeng-Volvo joint venture, which produces the Renault dCi 11.

And, as Deutz's largest shareholder at 25%, one can say Volvo indirectly builds engines in Cologne and Ulm, Germany, Buenos Aires, Argentina and the Deutz (Dalian) Engine Co. 50/50 joint venture with FAW in China.

 

[TeamsterGrrrl]

Would have been great for Scania to marry Mack a couple decades back, but after Volvo picked over Mack there ain't much left now. What would Scania get that Volvo wouldn't keep for itself? An old cab, the Maxitorque transmission, axles, and bogie, and that's about it. By the time Scania got Mack turned around, a Mack truck would be a revival of the Scania T model cabover with a hood with Scania engine and maybe some legacy Mack drivetrain options.

[Red Horse]

6 hours ago, kscarbel2 said:

The Swedish government would like to see D11 and D13 engine production return to Sweden. And for Gothenburg, Sweden-based Volvo, relocating that engine production back to Sweden would be a very politically correct thing to do. The government would smother Volvo with financial incentives.

Volvo engine production is NOT limited to the former Mack Trucks facility in Hagerstown, Maryland.

In addition, Volvo produces engines in:

Skövde, Sweden              Euro-6 D13 and global D16

Lyon-Venissieux, France  Euro-6 D5, D8, D9 and D11)

Curitiba, Brazil                 Euro-5 D11 and D13

Pithampur, India              Euro-3 and Euro-4 D5 and D8

Ageo, Japan                      GH5, GH7, GH8, GH11, GH13 (Nissan Diesel-developed D5/D8 and rebadged D11/D13)

Volvo could also negotiate to produce engines at the 55/45 Dongfeng-Volvo joint venture, which produces the Renault dCi 11.

And, as Deutz's largest shareholder at 25%, one can say Volvo indirectly builds engines in Cologne and Ulm, Germany, Buenos Aires, Argentina and the Deutz (Dalian) Engine Co. 50/50 joint venture with FAW in China.

So perhaps it's not that unrealistic to think Volvo could see some financial benefit to spin off the Mack brand (and Hagerstown and Macungie).  Then again, with the Mack brand gone, that is close to half of Volvo's US market share.

Doesn't seem too attractive from that perspective I would think.

[kscarbel2]

4 hours ago, Red Horse said:

So perhaps it's not that unrealistic to think Volvo could see some financial benefit to spin off the Mack brand (and Hagerstown and Macungie).  Then again, with the Mack brand gone, that is close to half of Volvo's US market share.

Doesn't seem too attractive from that perspective I would think.

The Volvo brand US market share continues to grow overall, whereas Mack brand market share remains stagnant. As that gap continues to widen, the reason for Mack's existence continues to weaken. Buying Mack, like White, Autocar and GMC, buying up that market share, was always for Volvo a means to an end. It was all about business....they have no love/passion for Mack as Americans do. Volvo has never understood the meaning of "Mack", as we view it, nor cared to. The goal has always been to climb the mountain, conquering and absorbing along the way, to reach the peak and battle Daimler for the position as the world's largest truckmaker by volume. (Now VW has entered the competition) 

We all recall the Volvo brand, for years, being far behind Mack in sales. But nowadays, Volvo is clearly out ahead of the Mack brand by a considerable distance. Volvo couldn't be more thrilled. And the Volvo/Mack dealers, who for years never promoted Volvo, are actually pushing it now.

Failing to compete in the long haul segment while being clobbered in vocational by Kenworth, and supported by incompetent corporate leadership who have distributor principals disgusted, the Mack brand is no longer the "center of the world" at Volvo/Mack distributors.

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Full Year 2014

Volvo brand global (overall) truck sales             117,194 units

Mack brand global (overall) truck sales            25,644

Volvo brand North America truck sales            33,800

Mack brand North America truck sales            23,634

Full Year 2015

Volvo brand global (overall) truck sales            113,066 units

Mack brand global (overall) truck sales            27,411

Volvo brand North America truck sales            38,890

Mack brand North America truck sales            25,302

Q1 2016

Volvo brand global (overall) truck sales           24,315 units

Mack brand global (overall) truck sales            5,176

Volvo brand North America truck sales            5,797

Mack brand North America truck sales            4,843

Q2 2016

Volvo brand global (overall) truck sales            28,255 units

Mack brand global (overall) truck sales            5,588

Volvo brand North America truck sales            6,786

Mack brand North America truck sales            5,192

 

 

[RoadwayR]

16 hours ago, kscarbel2 said:

Volvo is in serious financial straights right now. Aside from their US truck market being in the toilet owing more to incompetent management than macroeconomics, the money-losing Volvo Construction Equipment unit is pulling them under. The board is of a mind to sell, but with the market down, they wouldn't get much for it.

Shades of International Harvester in 1980.