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Withdrawal symptoms
Page 25
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The great meeting of minds and manufacturing promised in the VAN-Scania takeover has failed to take place. Where will the truck makers go next in their quest for bulk? Oliver Dixon reports.
MAN's hid for Scania was an ambitious one. Yet it failed, and initial analysis will inevitably centre on the likely near-term future of the human protagonists. Volkswagen's Bernd Pischetsrieder seems doomed; MAN'S Haan Sam uelsson looks likely to stagger, and Leif Ostling is no doubt looking pretty smug.
This has been something of a farce, but not without a basis in logic. All three players are small; in the light of a globalised truck business, they can only get smaller in real terms.All three must have scale and volume.or find something else to do. In one of its first go-away statements. Scania alluded to the upside of the deal,sayinrlf the integration plan is carefully managed and executed, Scania management has concluded that, over the long term, higher synergies than those announced by MAN are achievable:.
If we establish that synergies arc good, then where is the potential for achieving the same, following the withdrawal of the bid?There is still talk of an amicable merger between the three — but that, we reckon, is unlikely.
However, the case for an alliance is compelling for all three. The problem is, MAN, Scania and VW are star-crossed lovers. Implicit in the developing of synergies is the development of volume.The failed merger would not have achieved this;i t served merely to consolidate three existing positions and three established market presences. For both synergy and volume to be achieved, this is not enough.
Due diligence
We know that MAN and New have spoken in the past. In this business, one is only suspicious if people aren't talking to each other — it suggests due diligence. But, we come back to the fact that MANIveco would look very complementary. We feel that, despite the Italian company's considerable improvements, it looks increasingly uncomfortable in the heavy truck business.
The same applies to MAN at medium duty level. MAN-Iveco would offer a full line CV range with a good European footprint, access to India and China through budding J Vs, manufacturing facilities in Latin America, and good Middle East and North Africa coverage. A lot of boxes would be ticked.
What about the US? New wants in, and MAN is already there in spirit courtesy of its dealings with Navistar. Consider, then, a formal alliance between the three. Navistar is up for sale. Ring CFO Dan Ustian, make Illtm an offer and he will listen. He's said as much. MAN-Iveco-Navistar would offer a global footprint, global manufacturing and R&D facilities,plus full line product range and good volumes.To us, it's a no-brainer.
Where does that leave Scania, or VW for that matter? We assume the former will strengthen its ties with Hino; indeed, this is already ongoing. So maybe a Hino medium-duty product could find its way on to Scania forecourts. As Ibr VW, it could throw its LatinAmerican and LCV business into the pot. Certainly, there would be some Scania-VW overlap within the former,but then you can't have everything.
Legitimate notion
The notion of a globalised truck manufacturer is now an entirely legitimate one. DaimlerChrysler and Volvo have both seen to that, so it now falls to the others to get into line. We suspect Iveco's mooted tie-up with Tata is going nowhere, so it needs a boost.
MAN is a bit-part player in the global game and it, too,needs some help. Scania is profitable in terms of the old regional company model, but looks minuscule on a world stage. VW makes trucks by accident, and Navistar is a mess. Hino, courtesy of Toyota, has to be regarded as a sleeping giant. Somewhere within this lot exist two proper, global, truckmanufacturing alliances.
Mergers sound simple, but the reality is that goingfrom handshake and smile to full integration takes 20 years.This is the key calculation all of the brands discussed here must take into account.The global truck business two decades from now will bear precious little resemblance to the one which exists today. If the smaller firms wish to play a part in the future, we feel they should stop being so bound by the past. •