VW Truck & Bus head Renschler interviewed

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Manager Magazine  /  March 1, 2017

"We are developing for everyone, for MAN, for Scania, and for Navistar."

Mm.de: Mr. Renschler, Daimler has just called Martin Daum to the new Truckchef . They have done the job for almost nine years. Would you have liked to have him back?

Andreas Renschler: No, why are you asking?

Mm.de: You want to become "Global Champion" with Volkswagen Truck & Bus. The return to Daimler would probably have been the fastest way to the top.

Renschler: We have already reached that point in my time. I consciously left Daimler in 2014.

Mm.de: At Daimler you had a different, much more concrete goal issued: "Beat Volvo!" The Swedes were then the best in the industry. Are there now the term "Global Champion" and a few catchphrases like innovation, employee satisfaction and profitability? Are you thus enlightened by the fighting spirit of the organization?

Renschler: Sure, yes. Global Champion means that we want to be the best and not necessarily the greatest; And it also means that we want to be the most profitable truck manufacturer. This is set, which is very challenging and still a good way. Keep in mind: At Volkswagen, we started working together in the truck area just a year ago.

Mm.de: Daimler needed 20 years.

Renschler: At Daimler the truck brands Mercedes-Benz, Freightliner and Fuso were completely separated for a long time. Eckhard Cordes started working as a Truckchef in 2002 or 2003, in fact, to work really well. In my time we have developed this with a matrix organization. With us, everything will be faster.

Mm.de: Their brands Scania and MAN were a long time spinning enemy, now the Navistar rehabilitation case from the USA comes to it. You are only involved in the Americans. You can not go through it. These are not exactly the ideal conditions for building a champion.

Renschler: Sure, that's a challenge. This starts with the fact that we have two brands with Scania and MAN, both of which are strong in Europe. Scania has done a great job for many years. They have been banned over the years, "we do not need anyone!"

Mm.de: Do not say now, "Renschler, what do you really want? We are the best!"?

Renschler: Then I say: "True, today and only in Europe!" On the whole, Scania does not have the potential to become a global champion and quickly launch the innovations that we all need in the future. The Swedes know that. At MAN, we have a brand that had to pass through a deep valley. But the Munichers are also self-confident.

"Americans are pragmatic. American truckers are even more pragmatic."

Mm.de: These companies have consistently blocked joint projects. Then comes Andreas Renschler, and two years later everybody loves?

Renschler: They do not have to love each other at once. But a large part of the organization begins to think of the whole. A new engine, for example, costs several hundred million euros, and that is just the development. Because it makes a difference, whether I develop this engine for a brand or three times. These are the arguments with which you convince the teams and make global engineering from MAN and Scania engineering.

Mm.de: Now MAN and Scania are working on a common drive train ...

Renschler: ... and thus cover well 60 percent of the costs of a truck, not to forget. Volkswagen has been looking for the synergies for a long time in the passenger car themes: the same mirrors, sheet metal, headlights, seatposts, etc. This only brings small money to Trucks. This will not take you too far.

Mm.de: You have now taken a step forward. But does the enthusiasm of the self-confident Scania and MAN engineers really come as a surprise when they have to help the new American partners at Navistar ?

Renschler: Why do you say "must"? The strategic alliance brings benefits for all. We can no longer think of brands. No matter who took the lead in one component; "We are developing the engine, but we are developing it for everyone, for MAN, for Scania, and now for Navistar."

Mm.de: Volkswagen holds a 16.6 percent interest in Navistar. You can not determine anything. You must first convince the American developers that your engines are better than the US-provider Cummins used by Navistar.

Renschler: This is not difficult. Navistar has invested a lot in its products in recent years despite the financial problems. They did well. But money was missing for future-proof engine technology.

Mm.de: Purchasing suppliers does not have to be the worse solution.

Renschler: In this case already. A separate engine is becoming increasingly important in our business, because of the lucrative service and spare parts business. This is missing from Navistar. The Americans need their own engine and they want it too. With Navistar such conversations are naturally easier than initially with MAN and Scania. They come by themselves and say: "Please, give us the engines". It was similar with "Rio" ...

Mm.de: ... the digitalisation system for your trucks ...

Renschler: ... we briefly discussed this in the morning with a visit to the Navistar headquarters, and it was said "look". In the evening the board members came back and expressed very clear interest. Americans are pragmatic. American truckers are even more pragmatic.

"The results are still not good. That's true."

Mm.de: You have just received the approval for the participation, after a waiting period of five months. What now has top priority?

Renschler: We are starting immediately with our purchasing joint venture. Navistar wants to come through the partnership until 2021 to $ 200 million savings annually, purchasing is the fastest and easiest way. But we also go directly on the drive train.

Mm.de: If Navistar wants to improve the result by the cooperation by 200 million dollars: how much is then for Volkswagen Truck & Bus in it?

Renschler: I can not say that yet. Let us start with the fact that the cooperation between MAN and Scania will bring synergies of up to one billion euros per year by 2025.

Mm.de: Mr. Renschler, you will be sitting together with your Chief Financial Officer Matthias Gründler in the Board of Directors of Navistar. You should also send someone to the management. Navistar is a redevelopment.

Renschler: The renovation is almost completed. Board chief Troy Clarke has saved massively. Navistar has the lowest overhead costs of the entire industry.

Mm.de: The company still does not earn money.

Renschler: The results are still not good. That's true. But Navistar has a positive Ebitda.

Mm.de: The pre-tax result remains red.

Renschler: In 2010, Navistar had set the wrong technology before a tightening of the exhaust gas directives. Now they have to buy tens of thousands of affected trucks. These repurchases impacted the result.

Mm.de: Navistars Dieselgate, so to speak; Only less scandalous, ...

Renschler: ... maybe; But in any case a misdiagnosis of the company - at that time.

Mm.de: Navistar CEO Troy Clarke has been running the company for four years. He has not succeeded in rehabilitating. Will you act as a major shareholder?

Renschler: Sure, Troy Clarke did a good job for Navistar. He's been brought in as a firefighter. Others have laid the fire. The reduction in costs has already brought a lot. In 2012, Navistar has written nearly three billion dollars of loss. You can not turn this kind of society in a short time.

"Our priority is clearly in Asia"

Mm.de: Last year, Navistar lost 20 percent sales. This is not just proof of a turnaround.

Renschler: The US market was difficult for all of us last year. In the truck sector you are much more dependent on the market than in the car business. In both North and South America, demand in 2016 has declined significantly. But it is slowly getting up again. The Navistar customers have also registered the Volkswagen participation and see that better technology will soon be available. We will gradually reinforce this confidence.

Mm.de: Does this mean, in summary, that you completely do without management support from Germany and Sweden?

Renschler: No, the subject will be up at some point. If appropriate positions become vacant, Matthias Gründler and I will address this in the board. We will then see if we have someone for the task. But we are not under pressure. We trust the current management a lot.

Mm.de: Navistar may be another small step on the way to becoming a global truck company. But originally you wanted to take over truck manufacturers completely, in the USA and in Asia. This is no longer possible for the Group because of the billions of the bill. When can you really become Global Champion, the number one truck world?

Renschler: We have to adapt to the conditions: if a path is blocked, one has to find another, smart way. Also for our goal, we did not make a specific date. We want to create it in the next decade; And of course rather sooner than later.

Mm.de: And where do you stand with Volkswagen Truck & Bus?

Renschler: Let's make it simple and take only the profitability. At the front is probably Paccar; And we are currently ranked third or fourth.

Mm.de: In the first half of the year, you had an operating revenue of about 7 percent.

Renschler: We are on a good path. In the medium term, we aim to achieve an operating return of 9 percent on average.

Mm.de: They must improve above all internationally. How do you want to finance this? A stock exchange appears to be not really attractive because of the then impending depreciation. And if it were, the group would probably need more money than Truck & Bus GmbH.

Renschler: You do not always have to buy entire companies, we have shown this with Navistar. And there are other financing options than selling shares. We need to expand our global business intelligently. In Brazil, we are building trucks that are ideally suited for export. We sell these trucks to South Africa, Nigeria and Mexico, for example. And there are many other possibilities.

Mm.de: This alone is not enough to really globalize the Group.

Renschler: Right, our priority is clearly in Asia. This is by far the largest market, and foreign truck builders have so far played no real role.

Mm.de: You already have a partner there. MAN holds 25.1 percent of the Chinese truck manufacturer Sinotruk.

Renschler: This partnership has existed for what seems like forever, with few ups and lots of downs. Of course, we are thinking about how we can better establish ourselves in China. For example, we could also underpin an extended partnership by sending some people into management.

Mm.de: Volkswagen Group already has a truck joint venture in China. Would a second truck joint venture be an option there?

Renschler: That too would be a model.

Mm.de: Maybe with FAW? The company is associated with Volkswagen, especially with Audi.

Renschler: They are strong in the truck business, no question.