The Volkswagen Truck and Bus Group head responsible for the MAN and Scania brands has told Bloomberg; the company is exploring options for expansion which could include buying another truck maker and creating an IPO.
Former Daimler Truck and Bus boss Andreas Renschler took the top truck job at Volkswagen Group more than a year ago and in a recent interview with Bloomberg in Munich, he says that the US and China are regions for possible expansion.
Truck models are different in individual regions says Bloomberg, so expansion in the U.S. would probably involve an acquisition, but Renschler declined to comment on specific plans or targets.
Bloomberg says 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.
“In the long-term, the North American market is interesting for us, but it has to be a good fit for us as well as for a possible partner,” says Renschler.
He declined to comment to Bloomberg on whether Volkswagen would be interested in buying Paccar Inc. or Navistar International Corp., the truck manufacturer which partially owned by billionaire Carl Icahn.
In China, the world’s biggest market for heavy-duty 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,” says Renschler.
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.
Renschler will focus on intensifying cooperation between MAN which is currently under a restructuring programme due to falling business in South America, and the smaller, higher-margin Swedish-based Scania unit, which has been more resilient to swings in the cyclical truck industry.
MAN is cutting about 1400 administrative jobs and 400 production jobs to lower costs as part of a programme, which also includes a substantial expansion of digital services for truck drivers and logistics operators.
Future cooperation between the heavy truck brands will focus on joint procurement, research, business development, finance, and personnel.
A Volkswagen factory in Salzgitter, Germany, will produce non-driving axles for both brands, and the two independent assembly facilities in Russia are combining, according to Renschler.
Forging a powerful alliance will play out principally in western Europe, where Scania and MAN have a combined market share of about 30% according to Bloomberg.
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,” says Renschler. “You need to get people to really work together to achieve common results.”
