Volkswagen trucks business braces for slowdown

Sat Sep 15, 2012 8:37am EDT

* VW board member: could accelerate China growth with truck joint venture

* Sees slowdown in global economy, China, Brazil and Europe

* MAN, Scania, VW Commercial vehicles to coordinate, not integrate

* No plans to bid for U.S. rival Navistar

FRANKFURT, Sept 15 (Reuters) - Volkswagen's commercial vehicles brands Scania, MAN and VW Commercial vehicles will "coordinate rather than integrate" as they brace for a slowdown in Europe, Brazil and China board member Leif Oestling told Frankfurter Allgemeine Zeitung.

Volkswagen Group, which controls Swedish truck maker Scania and German truck manufacturer MAN as well as Volkswagen Commercial vehicles, is feeling the pain as commercial vehicle sales are hit by an economic downturn.

Volkswagen Group, which sells roughly half its trucks in Europe, will also be affected by an economic slowdown in America and various emerging economies, Oestling said.

"The European market is not the only one which is experiencing difficulties. In Brazil too, demand is falling," Oestling said in an interview printed in the Saturday edition of the German business paper.

"In China we expect a marked decline compared with last year, Oestling said, adding that deliveries had fallen by a quarter.

So far there are no plans to resort to shortened working hours, Oestling said.

Nonetheless Volkswagen wants to continue to expand in India, China and Russia, Oestling said. He also sees more potential for expanding Volkswagen-branded commercial vehicles, such as the Amarok pickup truck, in South East Asian nations.  There are no plans to expand in North America by acquiring U.S. peer Navistar, Oestling told the paper.

Oestling hopes to grow between four and five percent per year, depending on the economy, the Swedish executive, who used to head up Scania, said.

Volkswagen could accelerate expansion in China by increased imports or by founding another joint-venture company, Oestling said, adding that MAN had already taken such a step by launching Sinotruck in 2009.

Volkswagen is hoping to raise synergies between MAN, Scania and VW Commercial vehicles. "It's not so much about integrating the companies, as its about intelligent coordination," Oestling said, explaining that he enjoys the full support of supervisory board chairman Ferdinand Piech who has pushed for closer integration.

Oestling further said stalling profits at MAN could be countered by expanding its service and maintenance business, particularly since this was an area where Scania made handsome profits.

In July Munich-based MAN SE lowered its targeted profit margin and ordered a hiring freeze to counter plunging profits.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.