King of the Road

No Need to Sell a Million Trucks

Andreas Renschler Andy Ridder for HB
Andreas Renschler talks trucks.
  • Why it matters

    Why it matters

    Volkswagen has a big job on its hands trying to integrate its three trucks brands.

  • Facts

    Facts

    • Andreas Renschler recently became chairman of the Confederation of German Industry’s (BDI) Latin America committee.
    • Mr. Renschler took over VW’s truck division in February 2015.
    • VW is developing a joint truck platform for its VW, MAN and Scania brands, with a view to saving money.
  • Audio

    Audio

  • Pdf

Andreas Renschler, formerly of Daimler trucks, became the head of Volkswagen’s truck division in February. His overarching task is to integrate MAN, Scania and VW brands. Mr. Renschler recently traveled to a German-Brazilian business congress in the southern Brazilian city of Joinville. It was his first official trip as the new chairman of the Confederation of German Industry’s (BDI) Latin America committee. Mr. Renschler was far away from VW’s headquarters when the diesel scandal broke, but he still heard about it in Brazil.

 

Handelsblatt: Mr. Renschler, what do you have to say about VW’s faked diesel emissions tests?

Andreas Renschler: We have said we will clear up this affair quickly and completely. But you’ll understand that I can’t say anything more about it.

Latin America is also stuck in a serious crisis. Can you tell companies with a good conscience to enter the region?

Very clearly yes. If it’s the right market strategically, then you won’t be put off by a crisis. I don’t know any German company that has come to Brazil only because of the boom in recent years. They were all already there and have seen ups and downs over the past decades. Experience shows that after a Brazilian miracle comes another Brazilian miracle. That’s also the view of the BDI’s Latin American committee, by the way. We are all convinced of the potential for German industry in this region.

Eon and ThyssenKrupp have burned billions in South America in recent years.

You’ll have to ask those firms if they did something wrong. It’s not always the economy’s fault when something goes wrong. We have proven that you can make money here. The automobile industry came to Brazil in the ’50s. More than 60 years later we’re still here – and that shows that endurance pays off.

But recent years haven’t been great for the truck market in South America for you.

One of the biggest challenges is to export to other countries; that way local market fluctuations can be better balanced out.

How do you plan to bring the brands MAN, Scania and Volkswagen closer together?

We are working on that at full speed. Our top priority is to use the joint potential of the three brands. We want them to willingly work together, and for it to be fun and not forced. We have now started to cooperate more closely at different levels.

 

Volkswagen's Truck Brands-01

When will things change?

The leadership team is already there, thank God. We’re talking strategic issues and looking where it makes sense to develop shared technical platforms. That will be decided in the coming months, so they can be developed in the next four, five years.

How will the brands work together specifically?

In the truck business it’s the power train, motor, transmissions and axles that drive value – not the sheet metal. That’s why, for example, we’re working on a joint platform that MAN, VW and Scania can use to develop their own brand-specific transmissions.

How much do you want to save?

Volkswagen has always said that long-term €650 million ($730 million) could be saved annually. We’re making good progress towards that. There aren’t any new numbers. I won’t say any more.

Is it possible to leverage any synergies between the truck division and the car division, in terms of savings?

There are certainly possibilities, especially in research, such as development of new electric platforms, for example. But trucks and cars are two completely different businesses. The big difference is that we are not selling emotion, like the car industry, we are selling a machine that has to make money for our customers. For our customers, it’s about low fuel consumption, perfect performance and absolute reliability. These are the things that influence purchase decisions for us.

So emotion plays no role in truck purchases?

Emotions are only a small part of the decision. The brand is still important for sales. No one would sell a Scania in the morning and a MAN in the afternoon. These have to remain separate sales networks, because each brand has its customers. And this relationship to the customers is decisive in the truck business.

But there are considerable overlaps between the products within your three brands.

No, our brands are clearly differentiated. We have analyzed the amount of overlap between the three brands from the consumer’s point of view in markets like France, Germany, Poland – and the result was just 4 percent.

You want to become the world’s biggest truck maker, and that’s only possible if you have strong growth in markets like China, India or the U.S. Do you want to do that through acquisitions or by growing organically?

We’re number one with our Volkswagen truck and bus brands where we’re already present – in Europe, Brazil and in all of Latin America. And that’s far ahead of the competition. It’s a pretty good start.

But still far away from being top dog globally.

That doesn’t mean being the best by volume necessarily for me. I don’t have to sell millions of trucks. Scania is strong in heavy trucks. But Scania doesn’t have any light trucks. If you want to be in the mass segment today, you need small trucks, because they are especially used in Asia. But that’s not really interesting margin-wise. Being global champion for us means selling globally in segments where we’re already active. Our long-term goal is making Volkswagen’s truck division the industry leader in profitability, innovation and more than anything in customer satisfaction.

Will you have to make acquisitions for that?

All options are open on the road to becoming global champion.

Which markets take priority for you?

Asia and the U.S. are markets that we must look to long-term and we will.

 

Alexander Busch reports for Handelsblatt from São Paulo. To contact: busch@handelsblatt.com

 

 

 

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!