Handelsblatt Exclusive

MAN-Scania Merger Mania

  • Why it matters

    Why it matters

    Volkswagen board member Andreas Renschler talks about merging VW truck-making subsidiaries MAN and Scania, the future of the truck industry worldwide and not regretting leaving Daimler for Volkswagen, despite the diesel emissions scandal.

  • Facts

    Facts

    • Andreas Renschler is in the process of creating a new truck company out of two of VW’s truck subsidiaries Scania and MAN, with the goal of making it the global leader in terms of profitability. This company could then be listed on the stock markets.
    • Mr. Renschler took over VW’s truck business unit, consisting of subsidiaries MAN, Scania and VW Commercial Vehicles in February 2015 after heading Daimler Trucks for 10 years.
    • Following the Dieselgate emissions scandal, VW’s new “pact for the future” includes drastic cuts of 30,000 employess worldwide, of which 23,000 in Germany by 2020, and annual savings of almost €4 billion ($4.2 billion).
  • Audio

    Audio

  • Pdf
Volkswagen Truck & Bus Start-Up Night
Andreas Renschler left Daimler Trucks early in 2014 and started working at VW in February last year. Source: Holger Hollemann/DPA

There are no pictures on the wall yet in Andreas Renschler’s office in the new MAN headquarters in Munich. But candles, cookies and a cigarette helped create a holiday mood.

Mr. Renschler told Handelsblatt how he plans to integrate the two truck brands at Volkswagen, why Dieselgate hasn’t put the brakes on his plans – and when the synergies will start flowing.

He also expects regulators to approve VW’s involvement in Navistar in spring 2017, which will make a material difference when it comes to procurement, for example.

Mr. Renschler said he had a pioneer gene that made him want to press forward.

He added that beyond the goals he outlined for the company’s trucking business, a new culture is taking shape at VW in the wake of the scandal that emerged in September 2015. As the company seeks to redress legal complaints, pay fines and repair its errors, Mr. Renschler said he can see progress.

 

Handelsblatt: Mr. Renschler, you moved to VW a year and a half ago with the ambitious goal of creating the world market leader out of subsidiaries MAN and Scania. How is it going with your effort to catch up to Daimler, your former employer?

Andreas Renschler: I am very pleased with our development so far. The employees and managers understand our strategy and are cooperating. We want to make Volkswagen Truck & Bus the global champion in terms of customer satisfaction, innovation and profitability. We are not trying to be the biggest in terms of volume, though.

But MAN and Scania are still distinct companies today. Aren’t you still a long way from becoming the sort of champion you describe?

MAN, Scania and VW are working together on a number of projects. Our projects are achieving a great deal, especially in terms of cost savings. There is also our investment in Navistar, which will make us a major player in the United States. We intend to reach our goal of being the global leader within the next decade. We’ve already reached that point in Europe and Brazil, but we still need to fill a few white spots on the world map.

Isn’t this aspiration to grow bigger and bigger and go further and further precisely the culture that was so damaging to VW?

It isn’t about getting bigger and going further. People want to work at a successful company. This is a global aspiration, whether you a major corporation or a startup. Our customers feel exactly the same way. That’s why our goal at Volkswagen is to be at the front of the line.

What exactly made you leave Daimler? You were already the market leader with trucks there…

I apparently have a pioneer gene that motivates me to push forward with issues like this.

Wasn’t it more out of frustration that you were unable to become head of Daimler?

No. I have always taken on challenges that broke new ground. For Daimler, I built the factory in the United States and I worked on the Smart car. I was intrigued by VW’s commercial vehicle business. How often do you get the chance to build something new? The MAN, Scania and Volkswagen brands are a fantastic starting point.

“The German auto industry had been declared dead when I started working in the early 1990s.”

Andreas Renschler, Head of VW Commercial Vehicles

Do you have enough time to devote to your division? As a VW board member, you are also responsible for handling the fallout of the emissions scandal.

VW experienced the worst year in its history. But despite all the justified criticism we face, it’s important to acknowledge all the things that were achieved. We developed Strategy 2025 and decided on the future pact for the VW brand. All of this happened as we were dealing with issues from the past. This meant a lot of work for me, as I wear two hats. We were also setting an important course for the future with the truck division.

Would any decisions have been made differently without the diesel scandal?

Absolutely not. The diesel scandal created more burdens, both for us and our employees. But the main issue now is transforming the culture. Our goal is to change this old and hierarchical system. And that’s a good thing.

Aren’t some things easier now?

Yes. We have a breeding ground for change. We have much more constructive discussions in the board of management. The team headed by VW boss Matthias Müller is highly motivated and works very well together.

How are things different now than they were before the diesel crisis?

A culture needs to have room for contradiction. Different opinions also have to be accepted. Different opinions trigger discussion. We need this culture. Today no one wants to claim to know everything and be able to make every decision.

In addition to the emissions scandal, you also face technological changes, including electric vehicles and digitalization.

Radical changes like that have always existed. The German auto industry had been declared dead when I started working in the early 1990s. The conclusion was that it was not viable, had not done its homework and was near the end of its rope. Japan, with its “lean production,” was the shining example.

But the challenges run deeper this time. Digitalization means technological upheaval.

Yes, that’s true, but we often act as if these changes were happening tomorrow. We need healthy realism and a reality check. If we create the impression that we will be only be selling driverless trucks tomorrow, customers will say: Then I won’t buy a truck now. I’ll wait instead.

The best truck from Europe is unsellable in the United States, because there are completely different length restrictions there.

Aren’t you being too restrained? At Nokia, they believed until recently that the smartphone was not a breakthrough.

I’m not saying that. As far I remember, Nokia introduced one of the first smartphones into the market. It was probably too early. Electric cars and driverless cars will also come to Germany, but gradually. If we introduce autonomous driving with trucks, the main goal is to prevent accidents. We will be keeping the driver for quite a while. There is no doubt that digitalization will change transportation and traffic as a whole. It’s a matter of improving logistics and more effectively utilizing transportation capacities. That’s why we participated in a transportation exchange in the United States and introduced Rio, the first cloud-based operating system for the transportation sector.

But you also intend to grow globally and have invested in U.S. truck maker Navistar.

That was a quick and good decision. Unfortunately, we now have to wait for permits from the regulators, which will probably take until March. Then we will launch the purchasing joint venture and can agree on a joint strategy for engines and transmissions. Navistar made the wrong strategic decisions in the past. But now they have strong products in the pipeline again, products that are now hitting the road.

You are globalizing your business, but the world is moving in a different direction. From the United States to Russia and China, the signs point to isolation.

For us, globalization doesn’t mean that we build the standard truck and expect everyone in the world to like it. In India, a truck travels at an average speed of 12 kilometers an hour (7.5 mph), compared to more than 70 in Europe. This requires completely different truck concepts. The best truck from Europe is unsellable in the United States, because there are completely different length restrictions there. You can take along technology to different regions, but you have to create the product locally.

Nevertheless, if globalization is dialed back, it will also affect the truck industry.

I wouldn’t put it quite that pessimistically. As a capital goods industry, we are accustomed to dealing with cycles. When things take a downward turn, we are the first to suffer, and we are the last to benefit from a recovery.

VW didn't do everything wrong. We need to make sure people know this

Have you, like other managers, found inspiration in the Silicon Valley?

Yes, I was there. But I think there’s also a lot of hype there. It’s true that you’ll find endless venture capital and startups there. But the challenge is to transform a startup into a company. Unfortunately, the willingness to take risks isn’t quite as extensive in Germany. If we do something like that here, it has to be a success. The approach in the Valley is that we start with 100 projects, 10 of them go well and just a few are truly successful.

Is that a model for Germany?

We can learn from that: Courage, confidence and responsibility instead of the familiar. All too often, the name of the game in Germany is hierarchy. One person doesn’t talk to someone else because he is too far up or too far down the ladder. All challenges aside, we have to ensure that everyone supports our visions, goals and strategies.

What have you learned at VW so far?

That persuasion is everything. It’s much more important that some people believe. I’ve also learned how VW ticks. There are many positive aspects. The company has great technical competency. And through its brands and volume, it has enormous economies of scale that others don’t have.

It isn’t clear, however, whether your division will remain part of VW. Is there a case to be made for an IPO for the truck subsidiary?

The issue isn’t really at the top of our list of priorities now. Our first priority is to achieve greater cooperation between our brands. Then we need smart solutions for the markets where we don’t really have a presence. We’ll see what happens after that.

Does the car business no longer appeal to you?

I was at Daimler for 26 years – 16 years in the car business and 10 in the truck business. Someone who has only experienced one of the two worlds won’t understand the other one. I believe it’s very advantageous to be familiar with both worlds when I meet with my colleagues in Wolfsburg.

What car do you drive now?

I have a sports car from Stuttgart at home. I also drive a VW Touareg. Because I developed an SUV at Daimler, I know that the Touareg has one of the best undercarriages. And it also has a nice diesel engine…

…which needs new software now?

No it doesn’t! VW’s V8 diesel engines were not affected. But that’s what I mean. VW didn’t do everything wrong. We need to make sure people know this, both confidently and with humility, and in doing so we have to take our customers and their concerns very seriously.

Have you had to explain yourself to fellow executives outside Volkswagen in recent months?

We noticed that we were sometimes pitied and mocked. But it was meant more ironically than in a vicious way. But thank God people have also recognized everything we have achieved in the last year. If we had said half a year ago: We are creating a pact for the future and cutting 30,000 jobs, everyone would have said: “Sure, you do that.” And now we are doing it.

Mr. Renschler, thank you for the interview.

Martin Murphy covers the steel, car and defense industries for Handelsblatt. Markus Fasse writes about the auto industry for Handelsblatt. To contact the authors: murphy@handelsblatt.com, fasse@handelsblatt.com.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!