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MAN: can the Lion roar?

19th February 2004
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Which of the following most accurately describes the problem?

MAN is one of the classic marques but resting on ageing laurels is not an option. CM reviews its plans to compete on the world stage.

Throughout all the consolidation in the truck business over the past 10 years or so, MAN has remained fairly quiet and when it has taken part the results have been less than successful.

A joint collaboration with Renault on medium-sized engines stalled in the midnineties as the two companies couldn't fully agree their strategy; the takeover of ERF (although there are signs of green shoots now) has been at best rocky. And, likewise, the purchase of Polish truck builder Star: the factory there has now been adapted to build city buses. Given this track record, many industry analysts have drawn some fairly big question marks over the future of the Munich-based truck builder. Inefficiencies within the organisation, an inflexible labour force and over-reliance on one or two markets within Europe have combined to cast a shadow over the marque's long-term future.

Is it strong enough to continue alone? How can it raise profitability in order to invest in new products and where is its growth to come from? These questions are being asked within MAN's Munich HQ and by everyone with a vested interest in the structure of the truck business.

But the Lion which adorns the grille of all MAN trucks can still roar. Early last year the company teamed up with Scania on the development of gearboxes and axles; expect to see the Scaniabased boxes in MAN products in 2007. This will limit MAN's reliance on ZF as its sole transmission provider, and gives the company much-needed extra revenue as its rear axles will be fitted to Scannies. I Optimists saw this as the sign of a company restructuring for growth while cynics saw it as the last desperate throw of the dice.

But there's more. in November we received an upbeat message about MAN from city analysts Goldman Sachs, which rated the shares as being worth a decent punt. This was based on signs of recovery in MAN's home market: a massive focus on cost reduction including 4,000 job losses through.. out the truck and bus division: and a fairly new truck line-up.

And now MAN has taken the wraps off its all-new 1320 engine family, which sends a strong message to the market. Not only has MAN been able to find the €200m required to develop a brand new engine on its own: it is now perfectly placed to meet all the upcoming emissions legislation.

Long overdue

Admittedly the new engine was long overdue the range it supersedes is over 25 years old-hut the level of technology within the new motor is impressive. When joined by the larger (believed to be 12.8litre) version it gives MAN a formidable driveline.

But a few issues have yet to be ironed out, Firstly, the M and L2000 middle and lightweight truck range are overdue for replacement. They're still selling well thanks to a competitive pricing policy, but if MAN is serious about raising its brand perception it needs new contenders in this class or faces being left behind.

MAN is looking at a launch in spring 2005any further delays to this project could be severely damaging. What's more, the engines that power this machine, while updated for Euro-3 with the adoption of common-rail injection, are getting rather long in the tooth.

CEO Hakan Samuelsson admits that with volumes of only 25,000 for this engine he would be happy to look at partnerships to allow further development, though he insists that the firm is ready to go it alone.

The company has had a difficult couple of years in the UK, Troubles at ERF have held it back and, despite the restructuring, ERF's registrations continue to fall short of the 2000 truck target set by MAN sales and marketing boss Fred van Punch MAN's UK performance as a whole remains shaky, and blaming exchange rates just doesn't wash.

Outside the UK. MAN remains virtually 100% focussed on Europe. Notwithstanding the fact that the EU is set to enlarge greatly from June this year, this over-reliance on one territory leaves MAN exposed to the vagaries of European economic cycles.

Brand strength

Samuelsson agrees that this is a concern, saying: "We've been working hard to change the culture from being a very domestic organisation to becoming a more international company. The next part is to raise the strength of the brand into the top two or three in Europe.

"By building a very strong company in Europe we are then well placed to co-operate with the top companies throughout the world. The alternative if you are weak is that you have to deal with the bottom end weaker players.•

Tags

Organisations: European Union
Locations: Munich

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