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EDITORIAL
Scania would benefit greatly from VW’s tested Midas touch

AID Newsletter Editorial 1405 from Peter Schmidt - March 18th 2014


Scania trucks Sweden multi coloured

Open quote signIf anything is to be learned from recent automotive history, both the commercial and financial obstacles to initially promising takeovers are formidable and the benefits debatable, at best. 

Scania shareholders’ blatant rejection of VW Group’s €6.7bn bid

So what is to be made of today’s Scania shareholders’ blatant rejection of VW Group’s €6.7bn bid to purchase the remaining Scania shares that it does not already own?

To an extent, perhaps, the decision to say no to VW’s bid to swallow Scania is not at all unexpected. 

Those with a long enough memory may remember Renault’s bid to merge with what was then Volvo’s entire car and truck operation. 

Despite top management agreement at both Volvo and Renault to enter into wedlock, in the end Volvo shareholder gave the proposed deal the thumbs down.

The reasons? 

More subjective than objective. 

Put simply, the fear that a foreign company would call the shots at one of Sweden’s crown jewels. 

The proposed marriage was called off at the eleventh hour. 

Despite a mixed track record, and a global motoring history littered with many grand visions that were never realised, like the failed ‘marriage of equals’ between Daimler and Chrysler and BMW’s disastrous and cash-draining attempt to merge with ill-fated Rover, some mergers in this industry have more than lived up to expectations. 

Renault, with its admirable rescue of previously long troubled Nissan is one that stands out. 

Moreover, did ever a phoenix rise from the ashes quite like 
Romania’s Dacia? 

Probably not.

The Volkswagen Group has a no less distinguished track record in this same tricky field. Its track record speaks for itself. 

Be it Skoda on one end of the spectrum or Audi and Bentley on the other, operating within the VW Group has turned into a win-win for all family members. 

Old and new. History shows that under the VW umbrella all these brands have flourished in sales volume, job creation and foremost, in profitability terms. 

Early days, but if the group’s M&A history is any guide, the likelihood now is that not only Porsche and Ducati, but truck maker MAN no less will go from strength to strength in future years. 

Its proven track record as a winner on the global autoindustry scene is almost unparalleled. 

This year, a case in point, it will reach its long projected 10 million vehicle sales target; that’s four years earlier than planned. 

Likewise its profitability is almost the stuff of dreams. 

Apart from posting virtually unchanged operating profits of €11.67bn last year, its joint venture operation in China earned an additional €4.3bn. 

That’s not included in last year’s declared €11.67bn operating profit. 

By any measure, under the astute leadership of hard-nosed Ferdinand Piech, the Volkswagen Group has become one, if not the most accomplished and successful automotive industry giants in the business. 

In a way, he appears blessed with a rare Midas touch. 

What he buys turns to gold. Not just for shareholders. The same goes for its suppliers and employees. 

No doubt, Piech’s planned commercial vehicle strategy - aimed at combining the best of Sweden’s Scania and Germany’s MAN into a world force to rival the truck might of newly enlarged Volvo and Mercedes - is bound to succeed. 

That’s simply because it will follow the same proven success formula already cast in stone on the group’s flourishing car side. 

A truck-tailored platform strategy, leading eventually to shared cabs, engines, axles and gearboxes for both Scania and MAN is bound to succeed in the same manner that it already did on VW’s most profitable and fast expanding car side. 

The savings are expected to result in billions of extra profits. 

If anything, Scania is bound to benefit the most from an uncompromising total merger, thanks to the high quality and enviable reputation of its trucks. 

Scania, like Audi in the car field, is a top-notch premium brand. 

Chances are therefore that the next generation Scania-MAN truck generation will be more Scania than MAN. 

This is likely to guaranteed future jobs in Sweden

In all, should Scania’s shareholders have a rethink with a view of eventually accepting a revised VW offer when and if it comes? 

Yes. 

That’s chiefly because in this industry as in many, there is safety in numbers. 

And in the final analysis, and for all affected parties, today Volkswagen stands out as the perfect spouse. 

That’s more than can be said for many others in this business.
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MORE LIKE THIS:


WESTERN EUROPE | ‘Made in Germany’ - German production lines kept humming  03 Mar 2014


EDITORIAL | New roar to Jaguar Land Rover, but future looks complicated  17 Jan 2014


EDITORIAL | BMW is right to have a foot in both camps, payback may take longer  18 Dec 2013


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