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Scania's move is a dream come true
Page 17
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Volkswagen's acquisition of a controlling share in Scania is the result of one man's vision for a company big enough to rival Mercedes-Benz.
Words: Tim de Jong
THE MOVE THAT last week saw Volkswagen take a controlling share in Scania to form a group that could eventually become one of the top players in the truck industry was the result of one man's vision.
Ferdinand Piech is the grandson of car maker Ferry Porsche. Now 70, he has been an automotive engineer at Audi and chief executive at Volkswagen, where he initiated several exotic passenger car projects and gave the nod to a pricey new truck project, the development of a heavy truck range for nonEuropean markets, the Volkswagen Constellation.
After he stepped down from the top seat at Volkswagen, Piech ensured his notoriously iron-fisted way of leading the company continued at Volkswagen and Porsche. He owns shares in both companies.
Hostility When MAN attempted a hostile takeover of Scania. Piech stepped in to act as peacemaker, at the same time ordering Volkswagen to slowly increase its holdings in Scania and MAN. His vision was for an automotive company big enough to compete with MercedesBenz on all levels, as well as look a global giant such as Toyota in the face.
By approaching Scan ia's main shareholder, the Wallenberg family, directly Piech was able to convince them that by being part of the new automotive powerhouse Volkswagen is set to become, future research and development investments would be spread over more units, making them cheaper and leaving everyone happier. This resulted in Volkswagen buying the entire Investor AB and Wallenberg Foundations stake in the Swed ish truck giant, with no sign of an unwanted merger with MAN in sight.
Porsche In recent years, Porsche has become richer by the billions.
Shareholder Piech, among others, collected the profit, but was aware of a looming problem at Volkswagen. For decades, Volkswagen had locked 20% of its shares away in the province of Lower Saxony in Germany to prevent foreigners gaining too much of a say in Volkswagen via the stock exchange.
The German province is reluctant to let go of its stake. However, new European laws could force Volkswagen to bring this share to the market. Following the Scania takeover, Porsche may want to get hold of this part of the stock plus a lot more, giving it total control over Volkswagen.
There is no doubt that Piech masterminded these moves, creating in two strokes a big and strong auto company, which will also become a top player in the world of truck manufacturing.
Like Volkswagen, Scania has a plant in Brazil and rumours that its next move will be to gain total control over MAN were practically confirmed by chief executive Martin Wintcrkorn, who said that Volkswagen intends to execute another acquisition in the commercial vehicle segment before the end of the year. It already owns a 30% stake in MAN.
Marketshare It remains to be seen how far Brussels will let this planned move go. There might be warnings about the size of a combined Scania-MAN operation from competitors such as Mercedes-Benz and Volvo, as happened with Volvo when it tried to swallow Scania.
Should MAN and Scania come under one board of directors, supervised behind the scenes by Piech of course, the newly-formed group would have just over a quarter of the European truck market.
This would make Scania-MAN Europe's number one, overtaking Mercedes-Benz. Volkswagen would also surpass its arch-rival MercedesBenz in Brazil. It has been unable to catch Mercedes in the past, but with control over Scania, Volkswagen would take a comfortable lead in the Brazilian truck market.
On a global scale. Scania-MAN would rival the Paccar Group. An impressive achievement considering the top global truck manufacturers are all significant players in the US, a territory where Scania and MAN are completely unknown.
No doubt Piech is well aware of this, and maybe his next plan will be to conquer the US truck market as well. • Me FOR THE LATEST NEWS VISITS www.roadtransport.comicm