Andreas Renschler
The CEO of the truck group Traton prepares for the IPO.
(Photo: Christian Burkert for Handelsblatt)
HanoverThe often anticipated IPO of the VolkswagenTruck division Traton in the coming year is not necessarily safe. “There will be no IPO at any price,” said Traton CEO Andreas Renschler in an interview with the Handelsblatt. For example, nobody knows how the trade dispute between the USA and China – with corresponding consequences for the capital markets. At Traton would now be the necessary Conditions for Capital Market Capacity created. “Then we will see if the respective next step fits in the landscape,” emphasized the Traton boss.
According to Renschlers, the truck division makes the VWGroup makes good progress in finding common synergy potential. “From 2021 we want to have the first common engine platform for our trucks ready – and then we will see a lot more synergy every year,” he added. Together with its alliance partners in the US and Asia, Traton has an annual production of 420,000 heavy trucks. A uniformly developed powertrain should be used everywhere in the future. Core brands of Traton are MAN and Scania,
Renschler turned against the complete assumption of its foreign partners such as the US manufacturer Navistar, in which Traton holds a 17 percent stake. “It does not always have to be the complete takeover of a competitor in order to achieve the expected economies of scale,” said Renschler. In a partnership it is sometimes easier to implement joint projects faster.
Read the whole interview here
Three years ago, Volkswagen set up its own truck and bus division, which mainly brought together the previously independent MAN and Scania brands. At the Commercial Vehicle IAA in Hanover, the division demonstrates unity: with the first uniform appearance of all commercial vehicle brands from the VW Group in a single exhibition hall. Under the new name Traton, the truck sector is aiming for an IPO in the coming year. But in an interview with the Handelsblatt in hall 12 Traton boss Andreas Renschler indicates a certain restraint. The truck brands from the Volkswagen Group would first have to achieve their capital market capability. Only then will decide whether it really comes to the IPO.
Mr. Renschler, the cooperation between MAN and Scania under the Traton umbrella should bring about great synergies. How many billions have already come together? We do not call them numbers. We measure this in terms of earnings development, because such synergies must ultimately be there. Of course, we are not quite satisfied with the level reached. But the development of recent years clearly shows that cooperation is increasingly reflected in the result.
The operating result will continue to go up We continue to expect a positive development of our business. Our Model cycles are significantly longer compared to car manufacturersSo we need more patience. From 2021 we want to have the first joint engine platform for our trucks ready – and then we will see a lot more synergy every year. Until such successes are achieved, it just takes some time. Most other manufacturer groups have already realized considerable synergy potential, this is still in the future with us. Traton has only been around for three years. We have already come a long way.
Car manufacturer: VW wants to take more than 6 billion euros with truck IPO
That’s part of the stock market story that you might be presenting to investors next year, of course, and that’s definitely part of our path to capital market capability. In addition, we continue to develop our business with the so-called “smart partnerships”. It does not always have to be the complete acquisition of a competitor in order to achieve the expected economies of scale. This is also possible through cooperation. And that’s exactly what we do with our partners in the US, China and Japan.
Let us now come to the possible IPO of Traton. When will that be so far? There are still no concrete numbers and dates, because the IPO is not a decided thing. It is important for us to reach capital market capability by the end of the year. That alone is a major bureaucratic and technical undertaking. And the project is running at full throttle. At the same time, we are starting the process with Volkswagen of mandating external partners. We have to be able to flip the switch when the time is right.
Would it be possible that there would be no IPO at all, because a weak economy, for example, will ensure weak car stocks on the stock exchanges? For example, we do not even know how the trade dispute between the US and China is developing. To look into the glass ball would be nice. We are now making our preparations. Then we will see if the respective next step fits into the landscape. So there will be no IPO at any price.
In the past year, you have achieved almost seven percent operating profit, nine percent in the future, and we want to achieve that throughout the current cycle. It is not a point landing. We are successful then, if all synergy projects begin to take effect, then our long-term return target of nine percent should be achievable. The changes at MAN are a good example of this development. Three years ago, our Munich colleagues only achieved a profit of around 200 million euros, now they are well above this with about 530 million euros.
Andreas Renschler
What parts can be shared now with the truck: especially the engine and transmission? 60 percent of the value of a truck makes up the entire powertrain. The drive is thus clearly in the foreground for us: engine, exhaust aftertreatment, transmission and the axles. If you then add the electronics to it, then we come out at the mentioned 60 percent. That is exactly what we focus on when talking about synergies and joint projects of our truck brands and partners. So we’re not talking about cabs, outside mirrors and windshield wipers.
And which truck segments are most important to the Traton Group? Together with our partners, we are really strong when it comes to more than 15 tonnes of payload. The alliance, including the partners again, has an annual production of more than 420,000 heavy trucks. We want to use a uniformly developed powertrain in these trucks – and in such a number there is already a whole lot of music in terms of synergies.
MAN and Scania as an integral part of the Traton group will share the drive. But does that really apply to our partners in the US and Asia? We are already relatively far with Navistar in the USA. Our US colleagues also need economies of scale, so we’ll share the drive with them. Sinotruk in China has previously adopted MAN engines from an old agreement. Now comes a new joint venture in which both sides are equal. Especially in the joint venture, we want to use the common powertrain.
Do not you need the majority shareholding in Navistar to really be successful in the US market? We are very pleased with the partnership. We have many common themes and projects that work well. For example, with our purchasing joint venture, we are much further ahead than we originally thought. Therefore, a takeover is not on the agenda.
Infographic on the truck industry: Vicious change
What is better: the cooperation or the complete takeover? That always depends on the individual case. Both have advantages and disadvantages. A takeover does not automatically guarantee that everything is going well. Through partnerships, cooperation can slowly be cemented without one side always feeling overrun. A later takeover is still possible. A takeover is seldom voluntary. It will be harder to get everyone involved. That’s why I prefer partnerships today. Above all, we are thus significantly faster when it comes to implementing joint projects.
Scania and MAN were independent companies in the past. There must be some problems with the cooperation. That depends a lot on the respective corporate cultures. If there are major differences, there are more collaboration challenges. A corporate culture starts with the terms. The word cost planning is likely to be common in any business, but can be understood very differently from company to company. At MAN and Scania, cultural differences are limited and we have become familiar with each other step by step over the past three years. In addition, all have understood the great strategic lines, which has great advantages for all. It works better and better with cooperation.
What else have you paid attention to, we deliberately chose the new common name Traton. We take leave of the past, the new name symbolizes something in common. Internal communication is also important: if the response is correct, everyone will find their place under the common new roof. In addition, our business must be conducted largely independently of the cars, which Volkswagen also had to learn first. Uncoupled, it will be more efficient for everyone.
VW truck boss Renschler and Otto board member Schiebur: “Autonomous trucks are the future of logistics”
You mentioned the new name Traton. Can it go so far that one day the names MAN and Scania disappear? No, I hardly believe it. In the entire industry, perhaps once every 20 or 30 years, fully automated and digitized logistics services could replace the classic vehicle business. Then the brands of today would play a different role. But that would be an issue for all manufacturers and has nothing to do with the merging under the Traton roof. Today we have positioned our brands very clearly. Scania stands for premium and sustainability, especially in the service business. MAN does not have to be the first to innovate and makes everyday business as easy as possible for its customers.
It has long been clear that the VW Transporter would not belong to the Traton Group? The range of transporters stands between cars and commercial vehicles. On the one hand, we need the distribution network of the truck division for the vans because this is the only way to reach our customers. There are a lot of cars in the vehicles, especially the engines. Developmentally, the transporters therefore belong more to the passenger car division.
Mr. Renschler, thank you for the interview.