Monday, 8 February 2016
Volkswagen considers IPO for trucks division
Volkswagen AG is considering setting up an IPO for its international trucks division in a bid to counter Daimler Trucks and Volvo Trucks.
"This is an interesting decision for Volkswagen as keeping hold of the truck business might help it smooth out what is a tough period on the car front following the emissions scandal.” noted Christian Stadler, of Warwick Business School. As a Professor of Strategic Management he has researched Volkswagen.
He added: “But from the perspective of the truck division it will probably find it hard to get any extra capital to grow because the group's focus is on the emissions scandal, even though this is a good period to for the truck division to grow. The truck market is going through a difficult period, so acquisitions would be cheaper.”
Professor Stadler declared that Volkswagen was “too busy dealing with the emissions scandal” so that by letting the truck division turn independent might bring in the capital it requires.
“There is a big growth opportunity for its brands – MAN and Scania – in the US where they have very little presence, particularly when compared to its rivals Daimler and Volvo,” said Professor Stadler. “They are both active in the US and own other brands there. The market is very different in the US because of the regulations, but it could acquire a company like Paccar or Navistar International.”
"The other option for VW trucks is China,” he added. “The market is also expected to be slow, but Volkswagen is in a relatively strong position in China. It has a dual strategy, with a partnership with Sinotruk to produce trucks for the mass market, while its brands MAN and Scania take on the high end of the market. It could grow in China by organising additional partnerships with local players.”
Professor Stadler said that Volkswagen has “struggled” to find synergies between MAN and Scania since it acquired both.
He claimed this might be because MAN attempted a hostile takeover of Scania in 2006 which eventually failed. It has produced a non-driving axel for both brands and it is combining two assembly facilities in Russia into one, but there has been only limited progress in finding synergies.
“Having said that, I don’t see why that would be affected if the trucks division became independent, he concluded"