Scania chiefs steady ship
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• by Colin Barnett
The barely disguised anger at Scania after Volvo launched its bid to take over its fiercest rival has developed into a more pragmatic stance now that the deal has been finalised.
Perhaps flattered by the high value placed on it by Volvo, Scania's UK's managing director Ulf Bundell said it was "business as usual".
Describing the new relationship as existing on either side of "a watertight wall", Bundell confirmed that, from the assembly line onwards, both companies will operate independently, "separate for ever".
Indeed, such a situation is likely to be a legally binding condition of EU approval. The initial EU investigation into the deal is expected to report by the end of September; if it fails to come to a positive conclusion, a more in-depth review could take a further six months.
The merging of purchasing power will begin with remarkably modest aims, although cited as a major factor behind the deal. Scania hopes for a 5% saving within three years, mainly in areas such as raw steel, fastenings and wiring. Greater savings are likely in the sales financing sector, where the shared muscle should be able to buy cheaper money.
Bundell dismissed the likelihood of joint dealerships in the UK as "over my dead body", although the pooling of behind-thescenes activities, such as parts warehousing, is possible, he admitted.
On shared development of the trucks and major components, the company line is that any significant commonality could dilute brand identities to the point of being counter-productive. Bundell says: "This isn't the car industry—you can't fool the buyer".
And he pointed out that both companies have relatively new engine ranges developed with lifespans of up to 15 years, and neither company is likely to abandon these.
After 75 years of Scania ownership, the Wallenberg family's Investor group has taken 40% of the proceeds of the sale in Volvo shares.
With nearly 14% of voting rights, Investor becomes the largest single shareholder, and has a place on the board of the new Volvo company.
The big question that still remains unanswered, however, is what Volvo gets out of the deal, beyond a nice warm glow.