Following
in the wake of taking a stake in Navistar International Corporation, Volkswagen
AG is pitching in with a €420 million investment in Volkswagen Caminhões e
Ônibus in Brazil to boost that business’s poduct portfolio. Intriguingly,
Navistar too has operations in Brazil.
The investment is said to be the
largest investment package that the company has ever seen. Albeit spread over
five years, Volkswagen Truck & Bus's Brazilian commercial vehicle brand is
set to plough the money into the steady renewal of its product portfolio,
modernization of its plant in Resende, and the development of its connectivity
services. In the great scheme of VW's future planning, this investment in South America is actually quite modest and might even be seen as just a token gesture to one of its far-flung operations. The chart below shos the position for the heavy duty truck sector in 2014 when MAN/VW had an 11 per cent share of the market.
Andreas Renschler, CEO of
Volkswagen Truck & Bus and the member of the board of management of
Volkswagen AG responsible for commercial vehicle activities, spoke about the
reasons behind the investment, has declared: "We believe – despite the current
market situation – Brazil is an important market for trucks and buses. It has
always been a key market for the German industry and it will be again.”
He added “I am confident that the Brazilian economy has bottomed
out and will recover again in the next few years. In order to be prepared for
this, we are now taking money into our hands to be able to continue to offer
excellent products and state-of-the-art production. The entire Latin America
region plays a major role in our growth strategy."
Volkswagen Caminhões e Ônibus claims it has led the market for
the sale of trucks in Brazil for 13 years running. Resende plant staff work
together in close partnership with suppliers in a modular production system
sharing tasks.
Roberto Cortes, chief executive officer of Volkswagen Caminhões
e Ônibus, considers this a crucial advantage in the tough economic situation at
present.
"We have been selling Volkswagen-branded trucks and buses
for 35 years and our plant in Resende has been around for 20 years. It is only
through our innovative production concept which sees us work together under one
roof with seven partner firms that we have been able to join forces to take the
necessary action to overcome the current crisis and equip ourselves to deal
with an upturn that is sure to come," he added.
Renschler, also chairman of the Federation of German Industry's
Latin America Committee, joined Cortes in Brazil to brief president Michel Temer
on the planned investment. In doing so, Renschler emphasized: "German
companies think long-term. We might not be the first ones to venture into new
markets. But wherever we are, we persevere in difficult times too. Brazil in
particular is a country with which we enjoy very successful business relations
that go back decades and that will continue for a long time yet. That is why we
are strengthening our commitment at Volkswagen Caminhões e Ônibus
further."
However, neither Renschler nor Cortes gave any mention of
powertrain developments for the region. Nevertheless, while the two men held these cards close to their chests, one fact is certain. Now that VW has two seats on Navistar International's board of directors, these two men will have insight into Navistar's plans, if any, for Brazil and other regions of South America. Armed with this information the directors can, indirectly, guide the hand of Cortes in making a bid to boost the business of VW/MAN in Brazil.
According to Volkswagen AG in Wolfsburg, Germany, truck by brand/make sales and market shares in Brazil in 2015 were:
According to Volkswagen AG in Wolfsburg, Germany, truck by brand/make sales and market shares in Brazil in 2015 were:
Manufacturer
|
Sales
in 2015
|
Market
share
|
MAN Latin America
|
19.543
|
27,27%
|
Mercedes-Benz
|
19.161
|
26,74%
|
Ford
|
12.923
|
18,04%
|
Volvo
|
8.349
|
11,65%
|
Scania
|
5.224
|
7,29%
|
Iveco
|
4.492
|
6,27%
|
Caoa Hyundai
|
893
|
1,25%
|
FCA
|
80
|
0,11%
|
DAF
|
443
|
0,62%
|
Agrale
|
265
|
0,37%
|
International
|
67
|
0,09%
|
Shacman
|
2
|
0,00%
|
Other companies
|
213
|
0,30%
|
Total
|
71.655
|
100%
|
1 comment:
A whole host of questions about VW truck market activities in Brazil remain unanswered, not least concerning the implications of the German group’s recent tie-up with Navistar. Your pie chart shows the latter’s market share of Brazilian heavy truck sales in 2014 as zero, though it sells a few lighter commercial vehicles.
However, a substantial number of MAN (née VW) Constellation heavy trucks built in Brazil have for years been powered by 9.3 litre engines sourced from Navistar’s South American subsidiary MWM. No larger engines are available in the Constellation, even though it competes for maximum-weight operation with 12 and 13 litre engined Scanias, Mercedes and Volvos. In other words it is under-powered by North American or European standards – though acceptable to many South American buyers – who go for its consequently cheap price.
A key question is whether MAN’s 10.5 and 12.4 litre (they are externally the same size) could be shoe-horned into the Constellation chassis. If so they could be shipped in, not from Germany, but from Navistar’s Huntsville, Alabama engine plant, where they have been produced under licence for over a decade. That would enable the Constellation to be more competitive performance- as well as price-wise.
Andreas Renschler must also keep in mind the need to protect the VW group’s Scania brand. Scania has been a major player in South American heavy truck markets for many decades. Till now its premium-priced chassis have faced no serious competition from the Constellation.
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