The drama thickens

[kscarbel2]

Dagens Industri  /  August 21, 2016

A new wave of large mergers and acquisitions may well be imminent in the western truck markets.

A big question is how Volkswagen, VW Trucks & Bus, will break into North America.

Another question is for Volvo Group to sell any of its truck brands.

Things are going well for Sweden's two major truck brands Scania and Volvo Trucks. The two brands has never been so strong as now in the European truck market, a third of all heavy trucks sold in Europe comes from the Swedish brands.

Looking at its current record high market share in Europe, the highly capable Scania is excellent off-exchange as a company wholly owned by Volkswagen. But still, the operating margin decreased significantly since Scania left the stock market in 2014, the main reason for this is, however, extremely weak Brazilian truck market, which is normally extremely profitable for the truck companies.

A clear negative effect the delisting from the stock market has brought with it is that Scania has lost a number of key employees, including CEO Martin Lundstedt to Volvo. Scania has managed to fill the gaps with internal recruitment.

For the Swedish truck industry, it would be brilliant if Scania is able to both support its own development with excellence and in addition can spare experienced top executives to support Volvo Group's truck operations.

On Tuesday in Paris, Scania's CEO Henrik Henriksson displayed the company’s new truck platform, the first all-new Scania developed since 1995.

Development of the new truck has been going on for nearly ten years, and is the largest investment in Scania’s history, estimated that more than 10 billion kronor.

For the continued success of Scania, it is of the utmost importance that the new truck platform will be well received by customers.

Something that is also important for Scania's future is for CEO Henrik Henriksson to convince parent Volkswagen that having Scania engineers in research and development is a critical benefit for the Sodertalje-based truckmaker. The knowledge brought out of Scania to sister companies in the VW Group [MAN] in the future can be amply compensated by the fact that Scania can share the costs of research and development with the rest of VW Group.

Scania, which has been on its toes for decades with the clear position as Sweden's best truckmaker, is increasingly threatened by Volvo Group.

Former Volvo CEO Olof Persson’s efficiency program has provided a clear impact on the underlying profitability. This, combined with Martin Lundstedt product and customer focus, Volvo's truck business is heading for an operating margin of over 10 percent.

Something that will be interesting to follow in the coming years is whether Mr Lundstedt chooses to dispose of any of the Volvo Group's smaller truck brands to focus even more clearly on premium brand Volvo Trucks, and thus increasingly mimic Scania's successful development strategy.

Even more interesting, however, is when and how Volkswagen's truck chief Andreas Renschler will decide to take the step into the North American truck market. It has been two and a half years since Andreas Renschler left Daimler to become head of VW Trucks & Bus.

The stated objective since then is that the VW to become the world's largest truck company, which requires that Volkswagen is establishing itself in North America. It has been speculated that it will be done with VW Trucks & Bus buying Navistar or Paccar. But the emissions scandal surrounding VW's passenger cars has possibly put a spoke in the wheel. The delay is a positive for Volvo.

A long shot that should not be ruled out is that a Chinese truckmaker through an acquisition establishes itself on the European or North American truck market in the coming years.

[RoadwayR]

I have to think Volvo would more likely look to divesting it's construction machinery business than any of it's truck brands.  What would Renault or Mack be worth to anyone else?  Probably take many years before either one could operate independently of Volvo.  

Sure, VW Trucks wants to have a big presence in the North American truck market.  They really want to out Daimler Daimler, and that's not going to happen unless VW Trucks can somehow rival Freightliner.  I think VW had their chance with Navistar and are probably more interested in PACCAR now, but PACCAR is going to be expensive and there could be regulatory issues in both the U.S. and Europe.

Let's not forget that VW is likely the most inefficient major vehicle manufacturer in the world at present, and their diesel scandal is far from over.

 

[kscarbel2]

42 minutes ago, RoadwayR said:

I have to think Volvo would more likely look to divesting it's construction machinery business than any of it's truck brands.  What would Renault or Mack be worth to anyone else?  Probably take many years before either one could operate independently of Volvo.  

Sure, VW Trucks wants to have a big presence in the North American truck market.  They really want to out Daimler Daimler, and that's not going to happen unless VW Trucks can somehow rival Freightliner.  I think VW had their chance with Navistar and are probably more interested in PACCAR now, but PACCAR is going to be expensive and there could be regulatory issues in both the U.S. and Europe.

Let's not forget that VW is likely the most inefficient major vehicle manufacturer in the world at present, and their diesel scandal is far from over.

 

Absolutely, Volvo Group board chairman Carl-Henric Svanberg (who personally lured Martin Lundstedt away from Scania) would like to divest Volvo Construction Equipment (VCE). But as the construction market is tanked, they can't find a buyer who will offer them any more than a fire sale price.

VW's (ex-Daimler) Renschler wants to begin the process of getting into the US. But VW is up to its ears in mess right now.

You're right all the way. Navistar only wants a strategic partner, and Paccar (Pigott Inc.) would indeed be expensive.

VW Group "IS" the most inefficient "car" manufacturer in the world. That is a fact. MAN is inefficient as well, thanks to Germany's social welfare policies and its co-determination act of 1976 (Mitbestimmungsgesetz) which requires that half the seats on a company's board be held by Works Council (union) members (companies with over 2,000 employees).

Scania, and Paccar, are by far the two most efficient and profitable truckmakers in the world.

[RoadwayR]

Let's hope VW does not eventually ruin Scania!