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January 11, 2007

MAN -Scania Bid: now the Deaththroes.

Looks like the MAN Scania bid has finally died the death. In truth, it’s been coughing up blood in the hallway ever since Bernd Pischetsrieder received the surprise elbow from VW a month or so back, but the rejection by VW of the MAN offer – it is Scania’s biggest shareholder – has finally put the lid on things.

Continue reading "MAN -Scania Bid: now the Deaththroes." »

January 12, 2007

CNHTC Aims for $1 billion Exports by 2010

Volvo’s current Chinese truck JV partner China National Heavy-Duty Truck Corporation (CNHTC) has been doing a bit more sabre rattling. It expects its annual overseas sales to jump five-fold to $1 billion in four years as it aggressively pushes sales beyond its domestic market, says this report in the Peoples’ Daily.

Continue reading "CNHTC Aims for $1 billion Exports by 2010" »

January 16, 2007

Fiat’s Commitment to Iveco – Unwavering Says CEO.

Asked about Fiat Group’s commitment to the total ownership of a medium and heavy duty truck manufacturer, CEO Sergio Marchionne responded that it was ‘unwavering’. In a move that may be designed to distance Iveco from any fallout from an abortive MAN-Scania merger, he argued that, amongst all of the Fiat units, 'Iveco has the highest profit potential on the upside and similar potential for sales on the upside.'
Moreover, he reiterated previous comments suggesting that he sees no benefit from heavy equipment sector mergers - such as the possible Scania-MAN move - because the integration process is long and difficult.

Continue reading "Fiat’s Commitment to Iveco – Unwavering Says CEO. " »

January 22, 2007

More Merger Stuff

Two bits of M&A news have filtered through the ether over the weekend.

Continue reading "More Merger Stuff" »

January 23, 2007

Can Renault Survive?

There’s a rumour doing the rounds at present that suggests that Renault SA might be considering divesting itself of its around 20 per cent stake in AB Volvo. And, where there are rumours, there tend to be denials. So what of it?

Continue reading "Can Renault Survive?" »

MAN Backs Samuelsson. Family Flowers Only.

MAN has issued a statement backing Hakan Samuelsson.

The move comes in the light of reports suggesting that VW was gearing up to get rid of the Swedish CEO. "Coverage in today's press prompted the standing committee of the MAN supervisory board to reinforce their unanimous support for the position of Mr. Hakan Samuelsson as CEO of MAN AG and express their complete trust in him," MAN said in a one-sentence statement.

Such fulsome support tends to set the antennae twitching a bit. Looks like a burial before nightfall to us.

MAN-Scania. No More. Official.

MAN is to ask Swedish regulators for permission to withdraw its takeover offer for Scania.

The German OEM is quoted as saying that it is clear that the conditions of the offer will not be met by Jan 31st when the offer is due to close.
It said that discussions between VW, Investor AB and MAN have shown that there is 'an industrial logic' behind a combination of MAN, Scania and Volkswagen Heavy Trucks. This could not be achieved by way of the current offer given that both VW and Investor have rejected it.

This is rather a good example of how not to do things. Minutes before the official press release was made public, Forbes reported that Munich appeared to be in a state of abject denial.

Scania is obviously not displeased by this. Not only has it seen off an unwelcome bid, but it has also made one of its key competitors look rather foolish. Its response has an air of smugness to it, but it will be interesting to see quite what happens to its stock price when the markets absorb the news.

None of this comes as any real surprise. Granted, there is still talk of a 'friendly' deal, but, to our way of thinking, there is enough bad blood between the protagonists to preclude this. So how long before MAN turns its attentions to Navistar? And now might also be a good moment to ponder just how unwavering Fiat’s support is for Iveco, especially in the light of this report detailing the Italian carmaker's changes to its corporate structure.

January 25, 2007

GAZ and Renault

Renault’s foray into Russia has been consummated with the announcement of the adoption of its DCi11 for installation in GAZ’s Ural range. The engine will be made under licence via an agreement struck in June 2006.

Just a thought, but not only is GAZ acquisitive; it’s the new owner of LDV, and the new employer of the litigious Martin Leach; it is also cash rich – which, given the last point may yet prove useful – and has made plain its aims for the CV market. Think big.

With the rumour mill casting a spotlight on Renault SA’s long-term strategy concerning its AB Volvo holding, we wonder if there aren’t a few conversations taking place at present pointing to a more complete Franco-Russian tie up.

As we said, just a thought.

Scania Up by 12 per cent in 2006

Scania chose to bring forward its 2006 numbers – as a result of its spat with MAN – and we’ve got our hands on them. Interesting to note how much fending off Munich has cost - £14.54 / €22 / £28.66 million.

Continue reading "Scania Up by 12 per cent in 2006" »

Scania, Wallenberg, Nonsense

What is wrong with these people?

Having just seen £14.54 / €22 / £28.66 million spent on telling MAN to go breed, Investor AB – Scania’s second biggest shareholder – is now suggesting that everyone sits down again and agree a friendly merger.

Continue reading "Scania, Wallenberg, Nonsense" »

Iveco Better, Future Still Cloudy

And so to Iveco, which has – through parent Fiat Group – made its statement for 2006.

Not too shabby at first glance; revenues were up 7.7 per cent to €9.1 / $11.8 / £5.9 billion, and a trading profit of €546 / $708.74 / £359.57 million, up by 64 per cent on 2005, and suggesting a half decent margin of six per cent.

Sales are worth a look. In 2006, Iveco delivered a total of 181,500 vehicles (including 17,600 units with buy back commitments), up 5.2 per cent from 2005. Underlining the company’s still highly regionalized focus, Western Europe accounted for 135,100 unit sales, up overall by 3.2 per cent from 2005, but showing marked declines in both Italy and the UK.

Sales were good in Germany and Spain, whilst deliveries also increased in Eastern Europe, Africa and MENA. Latin America was fairly stable, but Iveco should be positioned nicely to take advantage of a predicted upswing in Brazil next year.

Thus far, it’s difficult to ascertain the sales split between Heavy and Medium / Light duty vehicles. We suspect that the latter is going great guns, whilst the former is looking a bit pale.

This is a key point. Iveco is – we believe – one of the potential dealmakers in the next round of consolidation – namely post MAN-Scania. A poor HCV showing could hasten a decision to reconsider its commitment to the heavy sector were a suitable – MAN-Navistar – merger partner to be found.

January 26, 2007

Volvo Adds Nightshift to Gent Plant

Despite the mooted downturn in the EU truck market this year, Volvo is to add a nightshift at its Gent plant, and, in the process, is looking for 400 additional staff, according to local radio reports.

A Volvo spokesman confirmed the move, adding that the company is eliminating overtime and the use of the Time Bank process.

Is this a case of under-capacity, or is it a case of manufacturing consolidation? Apparently, this is move is aimed at bumping up FH/FM production, so obviously Volvo is optimistic about the prospects for 07.

Or so it would seem.

Iveco and .......

Good to see that Sergio Marchionne is getting with program and talking about Iveco and possible mergers, as per the FT this morning.

Continue reading "Iveco and ......." »

January 29, 2007

Volvo looking at MAN - rumour.

The rumour mill is working overtime at the moment. The latest from investorland is a mooted takeover of MAN by Volvo.

Quoted in some reports is Equinet Securities AG Thomas Nagel, who says that there are: "Rumors Volvo AB might bid 90 euros apiece are boosting MAN shares.''

Unlikely, we’d suggest. But, if it does go the distance, it'll be interesting to see what Volvo's due dilligence people make of the news that the Zhongwei Bus & Coach Group has issued libel writs against MAN AG, Neoplan Bus GmbH and its marketing agency, claiming that the three defendants have seriously damaged its business reputation by claiming that Zhongwei's A9 bus was a "copycat design" of Neoplan's Starliner.


January 30, 2007

LDV Heads to India?

Interesting to see here that GAZ has signed an agreement with Ural India. What could this be for, we wonder. UralAZ has an existing relationship with Iveco, and GAZ wants to take over the world.

LDV for the Indian market? Certainly a thought.

February 1, 2007

Volvo CNHTC Deal Set to Dissolve.

This report says that Volvo may have to end its JV with Chinese-OEM CNHTC as a result of its relationship with new-best-friend DongFeng.

CNHTC is to file a listing application with the Hong Kong stock exchange next month. At the end of 2006, it projected sales of 60,000 units, and revenues of RMB 21 billion (£1.38 / $2.71 / €2.08 million). This all rather suggests that (1) the Chinese are getting ready to go it alone and (2) they’re not just thinking about China.

We don't like to say that we told you so - but hey - foresight is a wonderful thing.

Trebles all round in Gothenburg we assume. The Volvo-CNHTC JV has been a dog. In fact, it’s been rather embarrassing to watch the Swedish leg get lifted higher and higher. As one-way deals go, it’s been textbook. Last year, a magnificent 200 vehicles were moved, and we assume that CNHTC has higher hopes for its own Howo product – which bears a striking resemblance to Volvo’s own vehicles. Farcical.

So Volvo stands to lose up to SEK 500 / £36.6 / €55.32 / $72.04 million on the deal. We say it’s lucky to get out with a pair of shoes still on its feet – this was an ill-conceived, badly executed nonsense, and the shareholders should be celebrating on the one hand, whilst beating AB Volvo's management into a bloody pulp with the other. Should make for a good session tomorrow (Friday) when AB Volvo reports its 2006 numbers.

Now we wait to see what lessons have been learned as the DongFeng deal gets inked. Let us observe - and merely as an aside - that when supping with the Devil, the use of a long spoon is appropriate.

And what's happening with MAN?

February 4, 2007

Volvo. China Crisis.

And so to AB Volvo's results for 2006, which, in a soaring market, could hardly have been expected to be anything other than pretty damn good.

Continue reading "Volvo. China Crisis." »

February 5, 2007

New Model MAN TGA Truck Set for 07 Launch?

Is this version 2 of MAN’s now rather venerable TGA? There looks to have been a bit of a reskin, with a slightly reshaped front end and light clusters. Not sure what's underneath, but MAN needs to get its Euro 5 act sorted out a bit sharpish, not least as Iveco has decided to offer Euro 5 at Euro 4 prices from March of this year.

Continue reading to see the pic.

Continue reading "New Model MAN TGA Truck Set for 07 Launch?" »

Euro 5 Only for Iveco

We hear that Iveco is planning to delist its Euro 4 option to coincide with the launch of the new model Stralis - due in early March - and likely to be on display at this year's CV Show.

Iveco claims that all necessary OBD equipment will be built into the new truck, ahead of the October deadline. However, we understand that the Italian OEM is to maintain price parity with the Euro 4 offerings of other competing manufacturers.

February 6, 2007

Cummins Interview at just-auto.com

There is an excellent interview with Hugh Foden of Cummins over at just-auto.com. A synopsis is contained here in editor Dave Leggett’s blog – which, by the way, never fails to offer a reasoned and – at times – counter-intuitive take on the auto industry as a whole. As far as the Cummins interview goes, it makes some very interesting reading, not least in terms of a Tier 1 engine manufacturer and its survival plans.

Contrast the reasoned approach of Foden, and the somewhat vulgar bluster of Caterpillar’s George Taylor, and then choose which one to back. I’m not going to bet the farm on either, but I’d certainly be putting the mineral rights on Cummins.

MAN. Making Hay whilst the Clouds Gather.

We’ve been looking forward to seeing MAN’s results for 2006.

And here they are, complete with the sound of heads being patted, and champagne being uncorked. Alles ist schön.

No it isn’t.

Continue reading "MAN. Making Hay whilst the Clouds Gather." »

February 8, 2007

Piech to Head MAN?

Make of this what you will, but it seems like Dr. Piech is angling for the top spot on MAN AG’s supervisory board. Given that he has run Porsche with not so much an iron as a Hafnium Carbide fist, the Munich Job Centre might be well advised to cancel holiday entitlement for the forseeable future.

Can it get worse?

MAN, Scania, zzz...zzz...zzz...zzz

Can it get worse?

Evidently: now Investor AB has begun to stick its oar in once again, telling Handelsblatt that it would like to talk to either MAN or VW – the key word here is ‘or’ - about Scania’s future. One has to laugh at Investor's stated desire to keep discussions off the front pages of the newspaper - well, it amuses me at any rate.

This is fast turning into a Rocky Horror Picture Show for 21st Century truck manufacturing. One has to feel some sympathy for those who have been caught up in the unseemly machinations of the unholy trinity - Piech, Samuellson, Ostling - and one has – once again – to question the point of it all.

This merger makes no sense. It was doomed from the start, is doomed now, and should be consigned to the darkness.

February 11, 2007

Scania Aims for Euro 6 with EGR, and Misses the Point Entirely

I note with interest an interview with Scania’s R&D supremo Hasse Johansson in this month’s Transport Engineer, which indicates that the Swedish OEM will get to Euro 6 without recourse to SCR.

Continue reading "Scania Aims for Euro 6 with EGR, and Misses the Point Entirely" »

February 12, 2007

DAF Hikes Capacity at Eindhoven

DAF’s long-running capacity issues are to be addressed by the investment of €25 / £16.64 / $32.4 million in the Eindhoven plant, a move that will see daily capacity move from 180 to 300 units per day.

A pattern is beginning to emerge here: not so long ago Volvo announced a hike in its Ghent plant’s capacity, and now DAF is doing the same. What are we to make of all of this in times of a falling market and more expensive money?

Winterkorn Preaches Peace, Love and Mergers.

Interesting piece here about new VW boss Martin Winterkorn’s view of the MAN-Scania-VW fiasco. He suggests that the only way to bring the three together is within a framework of mutual respect and so on.

We question how this might be achieved. Hey Hakkan, you just tried to burn my house down, but what the hell, come in, have a cup of tea and take a load off. Just keep away from the matches. Cojones we say. As does that Ostling character.

Over at Volvo, meanwhile, and the rude gestures towards Munich continue. Leif Johnasson, quoted in FT Deutchsland, says: "In five years there will be only six or seven really big global truckmakers. We will be one of them." No shit, Sherlock.

BTW, he doesn’t want to buy MAN.

Iveco and Hyundai in China

News of a flurry of activity in China reaches us.

Continue reading "Iveco and Hyundai in China" »

Bush to Iran: Let's Have a War. OEMs to Bush: Let's Not.

Over the weekend, we couldn't help but notice that GWB and the neocon gang have renewed their efforts to drag Tehran into the fiasco that is the Middle East. US television has been full of tales of Mullahs under the bed and the like, and so it seems that another bout of unpleasantness is about to kick off in the region.

What does this mean for those automotive companies with an interest in Iran? Volvo has a NASDAQ listing and uses SAIPA as a regional producer. MAN has just started to do some serious business therein, and, whilst not having a NYSE presence, does have strong links with Navistar, a not unimportant supplier to the US military. Of course, Navistar has recently been kicked off the NYSE, but the ailing US OEM probably doesn't need an injection of geopolitics into its already awkward existence.

If this goes the distance, and Bush - of whom it may be observed, has, by his handling of US Middle Eastern policy achieved the impossible, and made the MAN-Scania debacle look reasoned and well-thought out - decides to press the bang button, then one or two European OEMs may find themselves with a problem or two. We've been here before, and it's good to see that CNN has begun to catch on too.

Options for DaimlerChrysler

More talk of DaimlerChrysler dropping its last two syllables here.

In truth, we rather like the idea of DC spinning off its truck business into a separate company. It makes money – even with Fuso – and could probably do a better job by itself than in its current position - which necessitates having to pony up to support the other ailing bits of the DC empire.

Such a move has been spoken of in the past – and at some length – but we wonder if the time isn’t now right to turn words into actions.

February 14, 2007

Iveco and Tata: No Decisions as Yet.

The seemingly on-off relationship between Tata Commercial Vehicles and Iveco – a potentially arranged marriage that could come about as a result of the alliance struck between Tata and Fiat - the respective owners of the two marques – is examined here.

At one level, the much-trailed possibility of a Fiat-Tata LCV JV has now been confirmed. Fiat will build a Tata pick-up truck at its Cordoba, Argentina plant. This vehicle will be retailed in selected Latin American markets, as well as through Fiat dealerships in some European countries.

But the broader picture is still very cloudy. Our view remains that any further collaboration seems at best conditional on a vast amount of things, most of which appear to be somewhat intangible. The Forbes article speaks of MOUs and study groups, and places an apparently open-ended timescale on any possible deal. Indeed, Tata's recent decision to cosy up with Renault seems only to confirm an ambivalence at least on the part of the Indian side.

But this reportsuggests that Iveco is being used by Tata as a replacement for that which was promised by Daewoo - acquired by Tata a couple of years ago - and to date, a far from stellar contributor to the Indian design effort. Make your own mind up.

We do not feel that Iveco looks comfortable with Tata. The original deal between the principles makes a lot of sense from the perspective of sourcing and cost-effectiveness in terms of car manufacture, but there seems to be some danger of Iveco being shoehorned into this. We see this as inappropriate.

Hence the current stance: there is no deal, but there might be. On the other hand, so there might not be. Only time will tell. But, with Iveco now a key player in the next round of OEM consolidation, it’s arguable if time is actually a commodity available to either side. Of course, a MOU does serve as a spoiler, but not one likely to be ultimately effective should Fiat be offered a decent sum for its truck business.

In truth, whilst Iveco would doubtlessly be a technology leader in any deal with Tata, it would be a very much junior partner in terms of scale. We come back to the elegance of an Iveco-MAN-Navistar alliance, into which input from Tata – and also Iveco’s Chinese partner Yuejin – would make a lot of sense.

DC Mulls Sale of Chrysler to GM.

Is DaimlerChrysler considering the sale of Chrysler to GM? According to reports from Reuters, which, in turn refer to German press reports, conversations between the two are now ongoing.

This is somewhat bizarre. Although GM has pulled itself back from a very real chance of bankruptcy, the fact remains that it is still in a parlous state. When compared to Ford, GM does – it must be said - look to have a robust future, but any other comparison would not be to the General’s advantage.

We cannot see GM’s already long-suffering shareholders standing for this, unless the price was very keen indeed. Like cent on the dollar keen. And, were a deal to be struck, how would DC’s shareholders feel about absorbing what would be a big loss. These financial considerations pale into insignificance when the damage to Daimler’s prestige is considered.

Once again, we ask the question as to why the truck business is not being considered for divestment. Not only is it profitable, it is also being held back by the problems within the rest of the empire. If GM does buy Chrysler, then offers of magic beans will be flooding into Rick Waggoner’s office. It seems most unlikely. But a separate DC truck business makes an increasingly large amount of sense.

February 15, 2007

DaimlerChrysler and Iran.

Here is an interesting little snippet of news from the ISNA agency in Tehran, which suggests that, far from exiting the Islamic Republic, DC is staying firm in the Iranian CV business, and is looking to develop a new truck product with its Iranian partner, Iran Khodro Diesel.

With all the loose talk concerning and end to the Chrysler relationship – which, after all, is the primary reason the company has a NYSE listing and is therefore concerned about doing business with countries that upset GW Bush – does this point to anything? Of course, the question could be asked about a divested truck business. Would DC CV, which seems to be aiming to produce an increasing number of CVs for the NAFTA market outside the US need a NYSE listing? Just a thought. And here's another one to chew over: one of the larger Merchant Banks has put a €30 per share value on a divested CV operation. Zetshce needs cash to sort Chrysler out. Of course, if this was seen as a step too far, how about a divested CV components business; a brand - Detroit Diesel - already exists.

Something is going to happen here: the only thing that is beyond question is that the current DaimlerChrysler is beginning to look untenable. This DC release suggests that fundamental changes are afoot. Whether they will impact upon the truck or the car business remains to be seen.

One bit of good news in all of this - for DC at any rate - is this news that a German court has dismissed one law suit against against the company. There are, however, one or more out there, and we suspect that Stutgart's lawyers are going to be working a full week for the foreseeable future.


The Great Chrysler Conspiracy. Part 17.

Another thought on the Chrysler business.

This is a master class in PR and spin. The first mention of a Chrysler divestment came around four months ago, when DC released its Q3/06 results. We return to our views as blogged then.

Here is an analogy. If you surrender to an anaesthetic in the honest-held belief that your arm is going to be amputated, and then awake to find that you’re only missing a finger, then how good are you going to feel? A finger – pish – at least you still have your arm.

The spinmeisters in Stuttgart are, we reckon, fully in control of this one. They have placed a vertical wind up the UAW – get into line or we’ll sell you to the Chinese – or – even worse – Ghosn – and have also managed to get most of the media running in directions as varied as Chrysler being sold to GM or turned into a fast casual restaurant chain. Divide and rule, and get people to look the other way .........

If nothing else, our estimation of the DC PR machine has been ratcheted up a notch or two. There is news here, but whether or not it is the disaster that a divestment of Chrysler would be seems in doubt. A less earth-shaking tale looks likely to emerge, and we wonder – again – if it might not involve trucks.

February 18, 2007

More Scania-MAN-VW Nonsense.

This report suggests that VW is looking to establish a head office in the Netherlands, should the mooted and – in our admittedly jaundiced opinion – utterly derisible attempt at forming a three way alliance from MAN, Scania and VW’s heavy truck operation. In our opinion, they could base the thing on Neptune for all the good that it’s going to do.

Combining MAN and Scania would serve (yawn) to merely (yawn) consolidate two regionalised OEMs, both (yawn) almost completely dependent upon the HCV sector (yawn) within the same region – namely Europe (yawn). As such, this merger would merely exacerbate the very issues that both MAN and Scania are trying to resolve individually; namely an over-reliance upon a cyclical, local market. How many times etc.

VW needs this because its truck business is a bust, and it needs a home for it. That is all. For MAN and Scania, it is a nonsense. A nonsense is still a nonsense, be it a nonsense based in the Netherlands, or a nonsense based in Nantucket. Or for that matter, Neptune.


February 19, 2007

Europe: Where's the Downturn?

January 1st 2007 was meant to be the day in which it all went wrong in Europe – at least as far as truck sales were concerned.

But it seems that reports of the death of EU truck sales have been somewhat overstated. January’s figures are filtering through, and, in Germany, VDA figures point to an eight per cent increase in sales of vehicles over six tones, with 7,400 vehicles sold during the month.

EU newcomer Bulgaria is also seeing robust sales, despite predictions that accession and the subsequent adoption of Euro 4 would precipitate a marked decline. Here, truck sales were up by over 75 per cent in January, with Mercedes-Benz leading the way, followed by Iveco in second place.

In the light of the news that both DAF and Volvo – and, for that matter, Mercedes-Benz – have all hiked their respective production capacities in Europe, one is left to wonder just where this downturn is.

Hino's Latest Lightweight. Europe-bound?

News here of the new Hino Ranger, launched today in Japan as a result of a change in driver licensing, which allows holders of a medium level permit to drive vehicles up to 11 tonnes GVW.

Hino%20Ranger.jpeg

Just a thought, but would not a 7.5 tonne – ish product sit rather nicely on Scania’s European forecourts? On the one hand, there is a clear argument for the end of the 7.5 tonne era – legislation would seem to make the 18 tonne truck the rigid of choice. However, if one considers the growth in the retail MCV segment – as witnessed by the success of Isuzu, and the presence of Fuso in Europe – then a competitive Hino MCV might find a happy home here. Given that we also hear that Japanese OEMs have finally accepted ISO rather than JIS standards for truck running gear, all of a sudden the European market seems rather more open to new market entrants from Japan than before.


February 20, 2007

Fiat.Chrysler. No.

If you hadn’t already worked it out for yourselves, here’s news that Fiat has no interest in Chrysler. And thus we find ourselves in complete agreement with Sergio Marchionne.

Excellent news - now the Italian OEM can get on with the business of buying MAN, hook up with Navistar, and, with luck, we can all leave for home before the traffic gets nasty.


Volvo Gets the Rest of Nissan Diesel

Volvo has swooped on the remaining bit of Nissan Diesel in a $1.1 billion/ €834 / £560 million deal. The Swedish OEM already owns just over 19 per cent of Japan’s smallest truck maker.

This is a good deal for Volvo. It offers the Swedes access to NDM’s hybrid research technology - of key interest to Gothenburg at present - and provides a retail brand within NAFTA – UD Trucks . It consolidates the nascent relationship with DongFeng, and therefore opens out much of the Asian truck market for Volvo - one of the company's - apparently - key target regions. Just for good measure, we reckon that the Swedes have done the deal at a car boot sale price.

But there are a couple of problems. This seems to mark the end of the Volvo – CNHTC JV in China. We’ve alluded to this before – they are far from being the best of friends – and so Volvo is going to have to tip up some serious coin for the divorce. Moreover, following the apparent end of negotiations with Ashok Leyland, Volvo's Indian plans must be regarded as being on hold.

It also leads us – once again – to question Renault’s place in all of this. Let us hypothesise that Carlos Ghosn decides to take his Renault-Nissan deal into the US, and makes a bid for a bit of Ford. Or Chrysler. Or GM, Studebaker or any other bit of the US biz that isn't physically nailed to the floor. At this point, Renault SA’s 20 per cent of AB Volvo looks somewhat surplus to requirements. He sells, someone buys. Just for larks, that someone could, of course, be DongFeng. But, even if the Renault SA stake ends up on eBay, we can see no reason for the Renault truck brand to continue. It is a dog. If Renault SA does sell, it’s a rabid dog. Mack, conversely – and represented by a Bulldog – has some mileage in the US.

If we had anything to do with Renault Trucks, we’d now be worried. Were we a Volvo shareholder, we’d be working out how much the CNHTC divorce was going to cost. And, if we were DongFeng, we’d be calling the bank.

Things just got interesting again.

February 21, 2007

Scania Takes Over GM's Sodertalje Powertrain Plant

News here confirms that Scania will take over the GM - formerly Saab - Powertrain facility in Sodertalje.

This move has been reasonably well trailed, but its confirmation serves two purposes. On the one hand, Scania's XPI Technology - born as a result of a JV with Cummins now has a European as well as a NAFTA home. The mention of production coming on stream in 2009 also adds weight to Scania's previous assertion that it will be in a position to offer a post Euro 5 compliant EGR engine before the Euro 5 deadline. For what purpose, we know not, but presumably it gives a warm feeling to some marketers in the frozen North.

But the news is also one more nail in the MAN-VW merger coffin. Scania is ploughing a verticalised furrow, and this is but one more example of this. We cannot see investment of this kind being bundled in with either MAN or VW - both of whom have some catching up to do. But we do wonder how interested Hino is in the goings on therein.

February 22, 2007

GAZ Targets the World

And on the subject of the Russian CV market, here is a missive from the GAZ Group, which has announced the complete integration of GAZ International (aka LDV) into the parent company's structure.

A spokesman says: "Earlier we had no centralized structure which would sell our products abroad so the group's divisions had to do this themselves. However we now pursue the policy of expansion to the world markets and there arise a need in a unified sales company,"

Watch this space.

February 23, 2007

MAN: Doomed, but Fun to Watch

The disaster zone that is MAN AG lurches from bad to worse, with the imposition of Martial Law and the deployment of the National Guard seemingly just minutes away.

Why do we say this? News here suggests that VW is to take a 30 per cent stake in the German OEM, and will demand three seats on its supervisory board. Short of appointing Bernie Ebbers as CFO and Blind Lemon Jefferson to head up design, we do not see how this can get any worse.

Let us recap. MAN wanted to be in charge of a deal in which its management - Samuelsson et al - led the way in to the future at the helm of a leviathan truck company, which would have consisted of Scania and MAN doing the clever stuff, and VW the washing up.

Scania wants none of this, and, VW, far from donning the Marigiolds seems to be setting itself up as the company in charge. Disaster.

VW's knowledge of truck manufacturing could be accomodated in some considerable comfort astride a pinhead. VW is a car company, with an accidental truck business, and putting it in charge of a truck company would be analogous to sticking Jeffrey Archer at the head of a Truth and Reconciliation committee; mildly diverting, but utterly inappropriate. VW joined this fiasco because it wanted OUT of truck manufacturing. Now it seems likely to become even more enmeshed in a business it has no apparent wish to participate in, and isn't very good at.

MAN has gone from being a half-decent, occasionally well-run regional truck company with pretensions to greatness, to a pawn in a game in which it, and its potential new boss - VW - seem to have no idea how to play. If the bookies are still taking money on the Oscar for Best Automotive Fiasco, we'd be most surprised.

Can this get any worse? We rather doubt it, but, like all good train wrecks, it's fun to watch. So, come on MAN - surprise us.


AB Volvo: No Chancers Here.

AB Volvo has announced the candidates for election to its Board of Directors, and there seems to be no place for Cevian Capital CEO Christer Gardell.

The fact that Volvo has given the Bronstjarn Cheer to Gardell leads to an intriguing situation. Cevian acquired a five per cent piece of Volvo last year, and has recently been in the market for a bit more, although it is yet to exceed the 10 per cent holding that would require it to get off the pot in marketspeak.

However, Cevian's motives have always seemed to centre on forcing a cash distribution amongst AB Volvo stockholders, and Gardell isn't likely to be able to force this from the sidelines. As such, we wonder if he won't cut and run - Volvo has been on a spending spree, and this seems to sit at odds with Gardell's wishes.

Which leads to the question as to where those shares might end up.

February 25, 2007

GAZ Eyes Chrysler - Report.

It had to happen sooner or later.

Last week, just about every corporate entity on earth denied being interested in Chrysler.

But now, courtesy of Marketwatch, comes the news that GAZ might be tempted. As we know, GAZ is a fast growing and well-financed Russian OEM with global aspirations, and also owns LDV. It is also the employer of Martin Leach esq.

The prospect of the serial litigant Leach doing business with the irritable UAW is one that we find most alluring. If this does come to pass, ML won't have CFO David Eggers to rely on. He's jacked after just 10 months in the job.

February 26, 2007

Today's the Day for MAN vs Freightliner

Today - Monday - is the day on which Freightliner has to tip up £250 / €372 / $491 million to MAN under the terms of the interim award made by Lord Justice Martin Moore-Bick, who found that MAN had been shafted over the sale of ERF. If Freightliner fails to pay up, it loses its right of appeal in the UK courts.

US Judge Kathleen Dailey awarded more than $850 / €644.8 / £432.69 million to MAN in the same case on 15 December last year. The lawyers are still arguing over the specifics of that one. We reckon that this is the biggest award of 2006, but presumably one unlikely to find a prominent spot on Zetsche's mantelpiece.

One thing that continues to confuse us is this. MAN acquired ERF before Freightliner acquired Western Star. Both were bought from Australia's best-known dustman, Terry Peabody. Presumably the financial statements were the same in both cases. So where's the news about DaimlerChrysler going after Peabody with a vengeance?

Of course, to a certain extent, Freightliner has had the last laugh. A Portland jury awarded the $850 million to MAN. At which point, Portland-based Freightliner responded with a terse Hasta Luego, your job's been moved to Mexico. Amigo.

Oh well.


VW: Vans could go to MAN

We can't help but be intrigued by the latest salvo in the VW-MAN-Scania debacle. Speaking at a VW press conference today, VW CV boss Stephan Schaller indicated that simply divesting VW's heavy truck business might prove to be a more onerous task than previously thought, and hinted at the possibility of sticking the German OEM's van business into the pot as well. There are, he suggested, more synergies between truck and van, than between car and van. He didn't make mention of previous bad blood between the two, but water under the bridge etc.

To us, this suggests that Scania's involvement in the deal is now over, and VW is looking to MAN as a potential partner in a full line CV operation. But this would turn VW-MAN into an almost mirror image of Iveco - without the Italian OEM's MCV capability. As such, there would be two regional 3.5 - 44 tonne CV producers focused predominately on the European markets, with a bit of incremental stuff elsewhere. Thus MAN's fundamental problem - a small regional truck producer in an increasingly big global league - remains unsolved. MAN's dealer network might cheer up a bit though.

But this seems to be a better idea than that suggested previously, which would have served merely to duplicate existing competencies in existing markets. Suggesting that someone has applied a soupcon of logic to the strategy. It is still a far from ideal solution, but it does sound less like an April Fools joke than a merged MAN-Scania.


Fiat's Future. Discuss.

Is Fiat contemplating spinning off its auto business? Forbes says no, whilst UPI and the Washington Post says yes.

If it isn't planning to something, then why did it recapitalize holding company Fiat Partecipazioni SpA? Was it bored?

And if protestations are being made about the future of the car business, where are the same about the truck and agricultural equipment operations? Is this the smoke that precedes the fire?

February 27, 2007

Freightliner Refuses to Make Interim Award Payment to MAN

We receive the following email from Freightliner:

"We have notified the UK judge that we will not pay the interim award."

We'll say no more at this point, but merely hope that both sets of lawyers - Clifford Chance and Slaughter & May are strapped in tight. MAN vs Freightliner looks set to become a bumpy ride.

VW Buys More of MAN. Rest of World Shakes Head.

We trailed news of VW's decision to up its stake in MAN a few days ago, and here is confirmation of the same. VW has paid out €1.2 / $1.6 billion / £80 million in order to take its holding in MAN to 29.9 per cent.

We still contend that this is a piece of abject lunacy. According to this report, Hakan Samuelsson wants to restart talks leading to a three-way merger after MAN AG's AGM on May 10th. It is entirely possible that the affable Swede has been talking to an astrologer, but we see no earthly difference between May 10th and January 23rd - the day MAN withdrew its hostile bid.

Scania has made it abundantly clear that it wants none of this. No really does mean no. VW's concern is to rid itself of an increasingly embarrassing liability - its truck business - and, in a fashion that is at best charmingly naive, sees MAN-Scania as a new home for it. The truth is that the three companies are more likely to fight like three cats in a sack, and all that will follow is ruin desolation and despair.

That VW boss Martin Winterkorn is seeking to become head of Scania's supervisory board just makes things worse. We now have three companies, three agendas and three clearly defined leaders, with three very obvious differences of opinion. This is not the stuff of a happy - or indeed any - sort of merger.


Daimler and Chrysler

The Daimler-delete-as-applicable debacle develops apace.

We now know that VW, Nissan, GAZ and Fiat aren't interested, and that DZ could - allegedly - be in the market for a bit of GM, were GM to take on a lot of Chrysler. FAW might be keen, as might Magna.

In other news, DC AG's supervisory board has approved the framework of a limited partnership that will see China's Chery Motor Co. build the cars in China, which will - no surprise here - be sold in North America and Western Europe under the aegis of its Chrysler Group brands. In blunt terms, Chrysler isn't for sale, but its North American jobs are. As we said before, this is all about big spin prior to the smaller announcement. Quite how Chinese-built Chryslers will play with an increasingly isolationist US consumer is a moot point, but it should be some fun to watch.

We believe - and have done from the start - that this whole business has been more about spiking the UAW's guns than anything else. There is one single over-riding reason why Daimler cannot afford to be without Chrysler, and it comes from the energy business.

Here is news of the biggest leveraged buyout yet seen, in which Kohlberg Kravis Roberts & Co (KKR) and Texas Pacific Group have come together to buy out Texas power company TXU in a $43.8 / €33.07 / 22.32 billion deal. This eclipses the previously biggest similar deal - the $25.1 billion takeover of RJR Nabisco, also by KKR, completed in 1989 - by not too far shy of $20 billion.

These are big numbers, and suggest that the Private Equity Corps are now unstoppable. If they want it bad enough, they'll buy it, and money is not a problem.

A few days ago, a number of PEC's - Apollo Management LP, Blackstone Group, Cerberus Capital Management LP and the very charming Carlyle Group - were all mentioned as possible Chrysler buyers. Unlikely, we think.

But, a Daimler without the encumbrance that is Chrysler would be a very different deal. The truck group - profitable despite the best efforts of Fuso would be on the block before the new owner was behind his desk, money would be banked and DC would - we believe - revert back to a regionalized producer of rather fine automobiles. Volumes down, cachet - and profit up. Why did Daimler-Benz buy Chrysler in the first place? Globalization, naturally, but it's entirely possible that a buy or be bought calculation was going on in St Schremp's mind.

Chrysler is a very good spoiler against possible PEC ambition. It is - in its present form - the corporate equivalent of gangrene, and the smart thing to do with gangrene is not to get it. Even smarter is not to pay for it. Which no sane PEC would. So Chrysler is Daimler's guard dog, a radioactive rock that no one wants to put in their pocket.

And that is why - we believe - it's going nowhere.

February 28, 2007

Marchionne Gets Mysterious

Sergio Marchionne is reported to have said that "The year 2007 will be the year of Fiat's heavy machinery unit CNH Global NV."

What does he mean? And why are there no reports of a mention of Iveco at Wednesday's Fiat presentation in London?

Is there a plot, and, if so, how thick is it?

Cummins: China Good, Tata History

Here's some happy news for Cummins. For the third year in succession, it has seen turnover in its Chinese business top $1 billion. According to the report, the US engine builder now makes 50 per cent of its money away from its domestic market - probably a good thing given the current state of the NAFTA Truck business - with India and Russia coming second and third to China in terms of value.

How does Cummins celebrate? It buys out partner Tata's stake in the Tata Holset JV. Does this mean Tata is looking elsewhere for engine assistance?

Maybe the fog has just lifted a bit in terms of the Iveco-Tata relationship.

March 8, 2007

Scania,VW,MAN and Kebabs.

Show me a truck industry merger - effected over the past three decades - that has worked.

Iveco: proves that you can add five things together and create an aggregated value of approximately 20 per cent of the whole. Top stuff. Gestalt accountancy.

DCAG and Fuso: another purler - a bravura performance consisting of oodles of due diligence incompetence, Fisher-Price management and a mission statement based around the notion of losing money. Superb.

Volvo and Renault: an absolute corker. For merger read takeover, and the only rational reason for Renault's continued existence is the implied threat on the part of Renault SA to flog its stake to the Chinese. Warm feelings all round.

Some smartarse will no doubt suggest DAF and Paccar. My pet squirrel could have gone into Eindhoven post bankruptcy and turned a bob. Again, takeover not merger.

So we come back to MAN and Scania. This is true kebab logic. After a rake of ale, a pita bread crammed full of something warm and organic seems like a good idea. Sober and clear-headed, the same victuals seem like a short cut to gastroenteritis.

VW is trying to force a merger between the automotive equivalent of the Montagues and Capulets. MAN and Scania are about as star-crossed as you can get, and you know why. I don't get repeat fees, and so if in doubt, check the blathering elsewhere on this blog.

But, rather than giving appropriate consideration to the dangers inherent in late night post session snacking, Piech has - by dint of buying a bit more of Scania and shunting his finance and supply people onto the board - not merely ordered up the house special with salad, hummus and the special Clorox-based sauce - but ingested it as well. This is the road straight to perdition.

I have been privileged to listen to a good deal of nonsense during my time in this industry. Until recently, I felt somewhat jaded by the abject gonadery spouted by those who should know better.

But VW's handling of the MAN-Scania fiasco gives me a lot of hope for the future. I'm no longer convinced that I've seen it all - instead, I'm looking forward to enjoying this new rich vein of idiocy. A cohort shift in imbecility, and one that is most welcome. What will they do next? It's exciting.

This is a genuine, epoch-making disaster, and, in quieter moments, I'm wondering who will get to play the protagonists when the script is worked up by Hollywood. A combination of James Woods, Marlon Brando and Norman Wisdom would seem an appropriate if impractical choice. Takashi Miike would direct, and Mahler would produce the score. We've not had a good disaster/horror movie for a while now; I'm sure that MAN-Scania-VW has already been optioned.

March 13, 2007

New Stralis, Iveco to Sell vans in the US

We've had confirmation from Iveco that the Italian OEM is in advanced discussions with a US-based partner with a view to launching the Daily van range in NAFTA.

More anon, no doubt - we reckon Navistar - but here's a somewhat sideways pic of the new Stralis - launched, as we predicted a while back - as a Euro 5 only product in many European markets.

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Stralis. The Truck that wasn't Needed.

One of the stranger comments to come from Iveco executives during today's launch of the new Stralis was the assertion that "We didn't need to do this."

Continue reading "Stralis. The Truck that wasn't Needed." »

March 16, 2007

Someone Buys and Someone Sells a Bit of Scania

So who has taken this stake in Scania?

We don't know, but if someone's just brought 1.1 per cent of the company, then, by extension, someone has just sold 1.1 per cent of the company. Interesting times.


March 26, 2007

Volvo Delays Q1 Report

AB Volvo has that said it is postponing publication of its First Quarter results as it deems fit to publish the results on the same day as its almost-completed acquisition - Nissan Diesel - which will release its year-end report on May 11.

DAF and China. What Next?

We've mentioned DAF's deal with Taiwan-based Formosa Motors in the past. The PACCAR scion already has an assembly deal with Formosa, based at Taichung in Taiwan, but there have been rumours of the establishment of a JV based in Zhejiang province in China.

These have now been denied by Formosa Motors parent company Formosa Plastics - which was cited as being the JV's primary customer. Taiwanese companies are the only foreign investors within China that are allowed to maintain a majority shareholding in local JV businesses.

But, if it's all going wrong, why were a number of Chinese journalists at the recent Mid America Show, and why was host company Peterbilt so keen to keep them away from the deleterious influence of the rest of the media?

DaimlerChrysler Mulls Truck Production in India

Here is news that DC is thinking - apparently seriously - about establishing a truck plant in India. It has - according to the report - earmarked a 15 acre site near Pune - coincidentally home to Tata.

"We haven't taken a decision yet, but there is a proposal to manufacture trucks in India. A decision on this would be taken shortly," a company official said.

Does this mean that DC has given up attempting to take either a piece of Ashok Leyland or a large lump of Eicher?


DaimlerChrysler HDEP to Launch in August

DaimlerChrysler's Heavy Duty Engine Platform (HDEP), its delayed global platform will launch in the US in August, Freightliner sources tell us. We do not know whether the entire 12, 14 and 15 litre range will be launched at once, but have been made aware of significant problems with the higher volume engine. Freightliner's new Class 8 truck, due for launch in May will be the first recipient of the new engine, which replaces the now venerable Detroit Diesel Series 60 in most markets.

It's uncertain as to whether a European HDEP will break cover at the European RAI Show, or an Asian variant at the Tokyo Truck Show, both taking place in October. However, HDEP is a key plank in DC's global policy, an so we assume that global availability is not far away.

March 27, 2007

DaimlerChrysler Delays Q1 Results, Analysts Urge Volvo Stock Sale

DC - like Volvo - has decided to delay its Q1 results. The numbers will not now be released until after the shareholders AGM on April 4th, and are expected on May 15th.

The reason given for this change is a shift to international accounting standards. AB Volvo, conversely, chose to delay its results to bring them into line with those of Nissan Diesel.

Either way, from a truck perspective, not having numbers to hand should mean a bit less body armour is needed at the AGM. It's also possible that some decision as to the fate of Chrysler may have been taken in a couple of months - but unlikely - think late summer at the earliest. We, for that matter, stand by our view that this is one big wind-up on the part of DZ, and merely an opportunity to get the UAW to sing the right song. But we digress.

Any road up: Volvo chose to delay its results on Monday. On Tuesday, Goldman Sachs downgraded its stock from Buy to Neutral whereas Deutsche Bank went from Hold to Sell. On Tuesday, the day when DC announced a delay in its results, its stock was trading at €61.92 - a five year high.

What happens on Wednesday?

March 28, 2007

Kamaz, K-B to Establish Russian JV

We receive this Press Release from Knorr-Bremese, which may be paraphrased thus.

Knorr-Bremse and KAMAZ have signed a declaration of intent, which will lead to the establishment of a joint venture in Russia. Knorr-Bremse will take over industrial leadership of the joint venture in which both partners have a 50 percent share. KAMAZ brings to the joint venture its activities in the wheel brake sector.

Based in Naberezhnye Chelny in the Republic of Tatarstan, KAMAZ is the largest commercial vehicle manufacturer in the CIS states and is currently achieving high double-digit growth rates for vehicle production. In 2007, KAMAZ is planning to build around 55,000 vehicles, primarily three-axle trucks. KAMAZ and Knorr-Bremse are long-standing partners and with this joint venture they are aiming to meet the ever- increasing demand for commercial vehicles in Russia and the CIS states. In addition, they will also be targeting various export markets. For the Knorr-Bremse Group, this step represents the substantial expansion of its production activities in the Russian market and thus an important strategic milestone.

Various export markets? We read with interest news concerning Kamaz's recently opened Chinese office, to say nothing of its significant deal with Iran, discussed here. Kamaz, it would seem, is becoming a rather large player, and one based dead centre in a market regarded by many of the Western OEMs as highly significant.

Tata Completes Acquisition of Hispano Carrocera

Some bus news.

Tata is to buy out the remaining 79 per cent of Spanish bus builder Hispano Carrocera for an undisclosed amount. The Indian OEM acquired a 21 per cent piece of the Spanish company in 2005, and is now exercising its option - which had another three years to run - to take on the rest.

March 29, 2007

More on DaimlerChrysler and India

We reported yesterday the rumour that DaimlerChrysler was considering going it alone in the Indian market by establishing a new truck plant at Pune, and this report lends some credence to the gossip.

It seems that the negotiations with Eicher have come to nothing - but quite what DC will do with its close to four per cent stake in the Indian OEM remains to be seen. This isn't the first time that Euro-Indian negotiations have stumbled as a result of arguments over management control - back in February we reported the demise of Volvo's ambition with regards to Ashok Leyland.

Of course, a standalone DC operation in India would cost more than a JV operation, but, ultimately, could allow the German OEM to develop business in a manner of its own choosing - we assume that components coming back to Europe is all part of the scheme.

At present, only the Actros range is sold in India, but we see some potential for the MD Atego and LD Sprinter ranges. Moreover, tropicalised versions of the same would be marketable throughout the rest of Asia as well. Of course, Mercedes-Benz already produces the Accelo in Brazil, and this would seem like a no-brainer for the Indian market.

March 30, 2007

DAF Launches Euro V LF

DAF has announced its Euro V compliant LF light duty range of Forward Control trucks.

Three engine choices are on offer: the 4.5-litre four-cylinder Paccar FR engine with output of 160hp (118kW) and the 6.7-litre six-cylinder Paccar GR engine with outputs of 224hp (165kW) and 250hp (184kW).

Both Peterbilt and Kenworth offer re-badged versions of the LF to the US market.

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April 3, 2007

Nedcar Courts Asian Truck OEMs?

There is a piece here in the Dutch press that tells of the Nedcar management's travel plans.

They're off to Asia, so the article tells us, and are speaking to two or three different interested parties - including Tata and FAW - of whom it is mentioned that trucks feature largely in their output.

Make of this what you will.

April 4, 2007

Zetsche: We're Not Scared.

Or so says this report from AFX. Questioned about the maybe yes, maybe no maybe does anyone care anymore merger between MAN, Scania and VW's truck business, DZ is reported to have said that, as DaimlerChrysler's Truck Group is already a world market leader and due to its size, it can already achieve synergies through scale effects.

"Therefore others are attempting to reach a position which we already have," he added.

Zetsche also said DaimlerChrysler has separated the Bus business from the Truck Group division so that the latter's operational figures could be more transparent. Whether or not this is on the advice of Former FBI Director Louis Freeh, retained by DC in 2006 in order to assist in the internal investigation of bribery allegations involving company employees, remains uncertain. However, Zetsche did say that there are no plans to sell the bus biz.

Which, given the seemingly questionable level of competence displayed by most people currently peforming Due Diligence within the auto industry at present is ..... you fill in the blanks.

AB Volvo Toys with Gardell and Shareholder Hormones

Confirmation here that there is no place for Christer Gardell on the AB Volvo Board, elections to which have just been approved at the AGM. Does this mean that CG and the Cevian Capital Caravan will go and find somewhere else to park, leaving a five per cent piece of AB Volvo in the window?

We're also intrigued by the warm up act at the AGM. Is AB Volvo attempting to distract its shareholders, and, if so, why?

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Scania's 2006 Report. Hino for Europe?

We've finally got through Scania's 2006 report - published yesterday - and our first observation is that as literature goes, we've not had quite such a ball-aching experience since we had to read Middlemarch in an awful hurry some years ago.

We've eschewed Eliot from that day on.

However, contained within the verbiage is one very interesting assertion, made by His Royal Leifness himself. It doesn't concern the MAN takeover bid - but we'll print his views on that anyway.

Which are:

"It is impossible to look at 2006 without commenting on
Man's public offer for Scania. Information about a coming offer emerged in September, and Man presented the full details in November. Scania's Board of Directors and leading shareholders rejected the offer on grounds that it undervalues Scania's full potential. On 23 January, Man withdrew the offer, since it had not gained acceptance among Scania's major shareholders.
Scania is well prepared for continued good growth with sustained profitability in the coming years. Its explicit ambition for the next three years is to grow by 10 percent annually, with a sustained margin of 12-15 percent. The company is continuously broadening its product portfolio. It is strengthening its service portfolio and boosting production capacity."

In other words, ****** off, MAN, and VW too.

But to our mind, the interesting comment is thus:

"During 2007 Scania will begin distributing Hino's medium- duty trucks in South Korea. This means we are broadening our product portfolio without costly research and development investments."

Forget Korea for a moment - here is clear evidence of Scania's wish to collaborate with someone. Does this push a Hino European-wide expansion closer to the starting line?

April 5, 2007

Volvo: 2007 European Market to Reach and Breach 300,000

Volvo CEO Leif Johansson has reiterated his view that the European Heavy Truck market will hit - and may exceed - 300,000 units in 2007.

Speaking to the AB Volvo AGM, and quoted by Reuters, he remarked: ""One can only conclude that the rate is stronger than that (the forecast) in Europe today, and I don't see anything today that would lead me to believe that it isn't going to continue."

Johansson is less sanguine about the US market however - although it is performing per expectations. He said that Volvo was almost perfectly in line with the 40-45 percent downturn it has projected for the North American truck market for the first six months of 2007.

But he repeated that visibility for the second half of the year was still too poor to be able to give a projection of how sales would turn out: "We don't have much order intake for Q4. The order intake we have now is for Q2 and Q3. And with that in mind all we can say right now is that we are where we were before."

Scania to Relocate Global Parts Distribution to Belgium: Report

The World Trucks Blog has spies everywhere - even in Belgium.

Which is where this little nugget of information stems from. It seems that Scania is to close its Södertälje parts distribution centre, and relocate the whole show to Opglabbeek in Belgium, where it will base its entire global network. This move has necessitated both a doubling in capacity in terms of the physical building, and the deployment of an extra 110 staff - adding to the current 260 employees.

Cool. We've spent many a happy hour - on six continents - nodding and smiling as parts centre evangelists conduct media tours of their facilities, and the sight of open air is one that never fails to bring joy to our hearts.

But, on a more serious note, this news follows the announcement that Scania was to open a paint shop in the Netherlands. Indeed, the Swedish company is on something of a Benelux trip at the moment, and we wonder what it means.

Some weeks ago, part of the MAN-Scania-VW furore kicked up the idea of basing the merged company away from both Germany and Sweden - the Netherlands was suggested as a distinct possibility.

Three things cross our minds here. A doubling of space and a staffing increase of over 40 per cent at a parts facility could suggest that the Scania product range is about to fall apart en masse. Is a huge tidal wave of breakdowns about to engulf the Swedish marque? Unlikely we think.

Alternatively, and we return momentarily to MAN and VW, a merger by stealth may have already happened - we don't really understand the ins and outs of the stock transaction necessary, but it is by no means impossible that a merger in all but name has already taken place. However, given the hot air that has surrounded this of late, we find it improbable

And so we're left with this alternative. Is Scania preparing the ground for an expansion of its product range through AN Other OEM? Hino's European presence is somewhat limited, and its support network underlines this fact. Yesterday, we quoted Leif Östling as saying that he wanted to broaden the Scania product range without spending the money. In case you missed it, here are his words again:

"During 2007 Scania will begin distributing Hino's medium- duty trucks in South Korea. This means we are broadening our product portfolio without costly research and development investments."

Once again we ask. Is Hino finally coming to Europe on the back of the Scania network?

Another Analyst Dumps on AB Volvo

WestLB has joined Goldman Sachs and Deutsche Bank in downgrading AB Volvo's stock. Get rid of, says the German bank, lowering its rating from Reduce to Sell.

Last week, Goldman Sachs downgraded Volvo shares from Buy to Neutral whereas Deutsche Bank went from Hold to Sell.

WestLB analyst Jose Asumendi writes that the company's earnings would be hit because it wasn't fully utilizing capacity at its North American plants.

No Sh*t, Sherlock.

"Although we believe that Volvo will profit from its global brand positioning, the short-term uncertainty leads us to downgrade our rating to Sell," he said in a research note.

April 8, 2007

Some US vs EU Truck Market Analysis.

Predicting the likely direction of the US truck market during 2007 - as it collides head on with the new EPA 07 emissions protocol - is easy. It's going down.

Continue reading "Some US vs EU Truck Market Analysis." »

April 9, 2007

Fiat to Split from Nanjing Automotive?

Interesting news here of a bit of a spat that appears to have broken out between Fiat and Nanjing Automotive.

If we've got this right, then Fiat is about to hand in its shares in the Joint Venture it has with Nanjing, and Chery is sniffing around with a view to taking them over.

SAIC has a 20 per cent piece of Chery, and is in the vanguard of Fiat's push into China. However, what happens to Iveco's van Joint Venture with Yuejin - aka Nanjing-Iveco or Naveco?


GAZ and the DCi11 Engine

More on GAZ and the Renault DCi11 engine here.

It's started testing the thing along with some Bosch engineers, who may just be mindful as to where their bread is buttered.


CNHTC Goes to Hong Kong

It looks like Volvo's relationship with CNHTC is now in its final days.

CNHTC, China's third largest truck OEM is to vest its entire 63.78 pct holding in CNHTC Jinan Truck Appliance Co Ltd - the Volvo JV vehicle - and other assets into another company -CNHTC Hong Kong.

According to a statement filed to the Shenzhen Stock Exchange by CNHTC Jinan, these assets will first be injected into CNHTC BVI, a British Virgin Islands vehicle, and then transferred into CNHTC Hong Kong.

Which presumably means that Volvo's deal with Dongfeng - via its acquisition of Nissan Diesel - is now a shoe-in.

April 10, 2007

Daily, Cursor Go to India in Tata-Iveco Tie-Up

And so the fog begins to clear. Tata will piggyback onto Iveco's distribution network in order to sell its heavier range within the emerging markets, whilst Iveco will bring its Daily van to India. Meaning that, if the PACCAR or Navistar deal comes off, then Iveco is selling the Daily in just about every world market.

Iveco also gets some good volume through what appears to be a solus deal ensuring that the Cursor engine is the de facto choice for Tata's heavy truck range.

All round, a rather nice deal.

AB Volvo Boosts Blainville Capacity

AB Volvo is to spend SEK 530 ((US$76.3 / €57.1 / £38.9) million increasing capacity at Renault VI's Blainville plant.

This investment is - so it seems - being implemented to allow both for a change to less environmentally damaging water-based paints as well as a capacity increase in terms of cab production - Volvo, Renault and DAF Cabs are all produced therein.

Back in January we reported on a similar production hike at Volvo's Gent plant, and so it seems as if the European market is on a roll. Well, up by 4.4 per cent at any rate, with AB Volvo expecting a FY figure in excess of 300,000 units.

This is all very counter-intuitive. The market was due to head south, with Eastern European demand keeping a flicker of hope alive. Instead, everything seems to be still booming.

We just have to assume that when the downturn comes - because it is a case of 'when' as opposed to 'if' - it will come quickly and hard.

April 13, 2007

More Grief for Gardell.

We're beginning to feel a bit sorry for Christer Gardell.

In truth, that's probably an exaggeration, but even so. No sooner has he been told that he's not wanted on (the AB Volvo) board - despite having around 10 per cent of the vote - he's being given the Bronx Cheer by Volvo AB Chairman Finn Johnsson. Gardell wants AB Volvo to get shot of its marine-engine and aircraft-components operations, and Johnsson is having none of it.

Sooner or later, CG is going to take the hint that he's about as welcome at AB Volvo as a numerate auditor would have been at Enron and decamp.

What happens to his shares then, we ask?

Hyundai to Bring New Van to Europe

Europe looks to be getting a new Hyundai van.

Take a look here for the details of the new H1 model - destined for both the EU and Asia. Given HMC's success in the US - driven primarily through offering an almost bomb proof warranty on its passenger car range - you'd be foolish not to take the Korean OEM very seriously indeed in the LCV sector.

April 15, 2007

It's Still DCX

And so Daimler does want to retain a stake in Chrysler.

Hmm.

Smoke and Mirrors anyone?

April 17, 2007

AB Volvo Caught Up in Insider Trading Nastiness?

Christer, have you been a bad, bad boy?

Yesterday, Ekobrottsmyndigheten - EBM - or the Swedish National Economic Crimes Unit arrested four people for alleged involvement in a Stockholm insider-trading ring.

Cevian Capital admitted that one of the men arrested was one of theirs.

Keen-eyed readers may recollect that there is little love lost between AB Volvo and Christer Gardell, head of Cevian, and a man seemingly dedicated to both selling off bits of the Swedish OEM and handing the money back to the people. Of whom, it has to be pointed out he - with five per cent of the gig - is one of the biggest. AB Volvo would prefer to keep things under the mattress.

And so it is hardly surprising that Volvo chairman Finn Johnsson has expressed some concern at the turn of events: "We have to hope that someone didn't manipulate the Volvo share price," he told the E24 website.

Under the circumstances, this sounds like a rather good thing to say.

And naturally, AB Volvo - with its NASDAQ listing - would probably rather not have the SEC go through its underwear. Of course it wouldn't find anything untoward, but think of the time such an investigation would take. Then again, no US truck maker is making trucks at the moment, and so maybe it would give VTNA something to do.

Silver linings everywhere, that's our motto.

MAN. Scania. WTF?

What on earth is going on here?

Remember MAN? Small German truck builder, pretensions of greatness, attempted to buy Scania, got given the finger - yes, that MAN.

Take a gander at this comparison between its stock price and that of Scania. It shows percentage movements of both from Mid-November 2006: Scania is in red, MAN in Blue.

MANvs%20Scania.jpg

Now in truth we've had about as much success with the markets as we have had with Begonias, but even we can see that both prices are pointing in much the same direction.

From the Scania perspective, we can understand. MAN drops bid, Scania's value dips and a new day dawns. The fact that it is now in the ascendant again suggests either the market likes the solo Scania, or it believes another bid is likely. It is just possible that there are some who consider a further approach by MAN and the VW crowd as being potentially successful. To this latter group, may we take this opportunity to offer you an assortment of magic beans and London Bridges. Much cheapness.

But, oddly enough, MAN's value started to ramp up around the third week in January - round about the time it dropped its bid for Scania. Since then - woohoo - today it closed at €90.89 - a 52 week high. In fact, a five year high.

Does this mean that the markets are taking Weinmann's waffle seriously? Or are they expecting someone else to come looking for the diminutive OEM?

We wonder.

April 18, 2007

Iwao Nakamura Elected to Volvo's Group Executive Committee

Iwao Nakamura, President of Nissan Diesel, has been appointed a new member of Volvo's Group Executive Committee, as of April 18th 2007, says this press release.

One assumes that his role involves doing as he's told.

Ford: Top Out of Turkey

Jeez.

No sooner had we finished blogging about Ford's loss of pole in China, and we're getting stuff about its performance in Turkey.

So, with the notion of balance in mind, here's the link. Ford. Turkey. Very good.

And very well done, say us.

April 19, 2007

Volvo, Renault, Iveco and Russia

AB Volvo is to invest SEK 935 million (€101.57 / $138.17 / £69 million) in another assembly facility for trucks in Russia. The Swedish OEM already has a plant at Zelenograd, just outside Moscow, which has a capacity of around 500 units per year and which was opened in 2003.

The new facility will be located in Kaluga, some 200 kilometres southwest of Moscow, and will boast a capacity of 10,000 Volvo and 5,000 Renault trucks per year. A final agreement is expected to be signed in the near future and the new facility is scheduled to be completed in 2009.

The Russian market for new western trucks has increased by nearly 100 per cent annually during the past two years and the Volvo Group's sales on the Russian market have followed a similar trend. Since 2003, sales of new Volvo trucks have grown from slightly less than 500 vehicles to 2,500 last year. We reported on Volvo's Q1 Russian sales here.

Today, the Volvo truck parc numbers around 31,000 units, corresponding to 23 per cent of the total foreign-make fleet. Renault Trucks established a presence in Russia in 2004 and has also increased its sales - selling 600 units last year.

Renault has also succeeded in building a strong position through the sale of used vehicles from Western Europe - and today there are a total of about 12,000 Renault trucks in operation in Russia. It's probably worth pointing out Renault's increasingly strong ties to GAZ at this point.

Both brands have also been quick to establish infrastructure too. Volvo inaugurated a wholly owned service facility strategically located just south of St. Petersburg on the expressway to Moscow, and, currently, boasts 31 authorized service locations throughout Russia. Renault Trucks currently has 17 service centres in the country.

It's worth taking a more general look at the Russian market, as it is deemed to be one of the places that will save us all. In the plus-16 tonne market, KamAZ still dominates, but many Russian truck operators are now choosing to replace locally built vehicles with second-life product from Western Europe.

In total, this sector - during 2006 - boasted 37500 units, of which 8600 - or 23 per cent - were imports. The market adoption of imported heavy trucks has been impressive, having grown by 80 per cent since 2005 and over by 300 per cent over the past four years.

But there's been a shift here too. Initially, these imports tended to be five year, 500,000 km vehicles at an average price of around €30,000 ($40,790 / £20,380). However, now operators are tending to opt for newer, two year old, 200,000 km tractors - sometimes still under warranty - and with a price tag of between €40-46,000. Volvo saw around 5000 trucks imported from Western Europe in 2006, whilst Iveco imports numbered around 4000 units

And before anyone gets the idea that the Western OEMs are pushing the locals out of business, both KamAZ and Iveco's JV partner UralAZ haven't been doing so badly. KamAZ has also been very quick to position itself as a frontline supplier to other emerging markets, and its leasing business ain't half bad either.

And then there's GAZ - another story.

April 20, 2007

MB Trucks at Auto Shangahi 2007

DaimlerChrysler's Truck Group is showing four heavy-duty trucks at at Auto Shanghai 2007.

Three versions of the Actros are on view, including a tractor unit, recovery vehicle and a concrete pump chassis. Also on display is an Axor tractor unit, which is being pitched to the Chinese as a "more economical solution for construction and utility usage".

Mercedes-Benz currently leads the Chinese market in terms of vehicles imported from Western Europe, boasting 44 per cent market share.

April 27, 2007

More on Iveco and Navistar

Fiat is considering ways to enter the U.S. market with Iveco SpA, its truck-making unit, in the next few months "especially in terms of acquisitions,'' Marchionne said during a conference call with analysts.

We've blagged this paragraph directly from a Bloomberg Report - which is available here. Does this mean that a deal with Navistar is now really in the offing?

We've been prattling on about the elegance of such a tie-up for a while now, and Marchionne doesn't tend to make comments such as this without meaning to.

We assert once again a very simple observation. How often do you get the chance to buy 20 per cent of a major world market at a heavily discounted price? We like the look of this - and we assume that MAN doesn't.

Iran, Africa and Scania

Another example of the growing international focus of the Iranian automotive business can be found in this report from Press TV, the English speaking Iran-based broadcaster.

This is a notable deal. Iran Khodro Diesel will export $2 billion worth of commercial vehicles to Gambia. In another deal between Iran and Africa, IKD is to export 200 buses to the Ivory Coast.

But it's not all one-way traffic. Scania has just announced that it is to supply 'a few hundred' buses into Iran, and it's not saying to whom. We've asked but trying to get a straight answer out of these people is like pulling teeth. We did get a cup of coffee out of Scania at the recent CV Show in the UK, but were not wearing a name badge at the time. A partial success then, but it made us feel good, and life is improved somewhat by occasional victories over the forces of darkness.

Whatever - we digress. Scania did once have a deal with Oghab in Iran for CKD bus production. We believe Oghab is a part of the SAIPA set-up but, beyond that, we know nothing.

April 30, 2007

MAN Strike Threat

There is nastiness on the horizon for a number of German companies, not least MAN, says this report from AFX, published in Forbes Magazine.

IG-Metall, one of the main German Labour Unions, and an all-round fun bunch began a series of strikes yesterday - Sunday - as a precursor to more involved industrial action later on this week.

VW,MAN,Scania again.

And again from AFX via Forbes come this news, which tells us that VW is to initiate - its words, not ours - new talks with a view to a merger between MAN, Scania and itself, after the May 10th MAN AGM - itself likely to be a diverting afternoon. F Piech wishes to be elected i/c MAN AG, and presumably Samuellson has been drafted in to do the teas.

A couple of observations.

Leaving aside the fact that this is as large an outbreak of muppetry as we have ever been privileged to watch - a genuine dog of a deal - why, if VW is so keen to tie things down is it ploughing its own Constellation deal in Russia and China?

And what are we to make of Investor AB's demand that there should be no Scania job losses? IG-Metall has already demonstrated its irascibility about all of this, and so if the synergy savings are to be offered entirely from Munich, we can only assume that its mood will darken yet further.

Whatever. In the interim, we will now go forth and attempt to train the feral cat - which has done much to disturb our sleep of late - to howl a selection of melodies from HMS Pinafore. We are unsure as to our likelihood of success in this venture, but would wager more on a trained Tomcat than on a merged VW-MAN-Scania. Or for that matter, on our becoming the Ruler of the Queen's Navy.

Etc.

May 1, 2007

Paccar and ForEx

Right then.

We are about to stub out the last cigarette and consign ourselves to ten hours inside an aluminium tube with only the prospect of the INS at the other end. Back to America for the World Truck Blog, and, tomorrow, the launch of the new Freightliner.

More of which anon.

There is an obvious sign upon our forehead that suggests a keenness to enter into dialogue with other passengers. This assumption needs to be corrected - we are grumpy when confined, and view humanity with some disdain. Avoidance strategies are required.

And so, for the next few hours, we shall merely close our eyes and speculate as to just how much of Paccar's most recent success has been as a result of favourable Forex movements.

This chart shows the fall in the value of the dollar against the Euro over the past year. How much of this has filtered back to Paccar's results? DAF can cut prices, report in Euro, convert to Dollars and still be in the money.

Euro.jpg

Now we realise that it is written somewhere in a calmer part of the Old Testament that Paccar will always offer its shareholders splendid value. But how much of this recent value has been down to good management, and how much to a basketcase Greenback?

May 3, 2007

Business booming for MAN Trucks

First quarter results released today by MAN Nutzfahrzeuge show the German truck manufacturer continues its unprecedented growth rates.

Its share of the European truck market above 6.0t GVW is now at 16.7% - up from 15.3% for Q1 2006 - the order book is 33% up in terms of order revenues and the company is well on course to hit its 96,000 truck production target for 2007. MAN Nutzfahrzeuge chairman Anton Weinmann says the preliminary figures for April are also looking extremely positive with turnover up 18%.

MAN%20CEO.jpg

Continue reading "Business booming for MAN Trucks" »

May 7, 2007

Volvo to Buy Paccar - says Washington Post

We read with interest this interview with Leif Johansson, conducted by a character called Warren Brown in the otherwise relatively switched on Washington Post.

We learn two things. One, Volvo may buy Paccar. WTF? I mean, Paccar is about as over-rated a deal as there is at present, but an acquisition target? Pshaw. Whither Gardell we ask.

Two - and head for the last paragraph for this - brown nosing remains alive and well in the US media.

Trust WP subscribers are asking for a refund for this issue. Ocean going bollocks from the first to the last word.

PACCAR Buys TCH

Meaning fewer second hand MAN trucks around, and more second hand DAFs.

Hey ho.

May 8, 2007

Fiat Powertrain and Ford

An interesting bit of gossip reaches our desk, suggesting that Fiat might be in the running to begin supply of a diesel engine to Ford in the US.

Could this be a replacement of the ill-tempered Navistar deal? Fiat-powered Super Duty anyone? And what does this say about the mooted interest in Navistar on the part of Iveco? Or that in Cummins on the part of Fiat Powertrain? One thing for sure, it bumps the Fiat Powertrain business yet further towards centre stage.

Odd really. Having just got used to losing the Iveco-Ford thing in the UK, we could now be resurrecting something similar in the US.

ArvinMeritor Plants Mull Strike Action

Worrying times for ArvinMeritor, and, more pertinently, its customers.

According to reports on Belgian radio, AM's Light Vehicle Systems plant in Brussels has downed tools. This is something of an issue for VW, as it is the sole supplier of door modules to the German OEM. No door modules equals no cars, JIT or otherwise.

If this strike spreads - it's apparently come about as a result of AM's announcement of swingeing job cuts worldwide - then what happens to the likes of Iveco - dependant upon AM for truck axles?

May 15, 2007

Daimler: Ourselves Alone.

It's not like we don't have other things we need to be doing at the moment - a whole lot of rewriting to ensure that the C-word is now excised from anything to do with Daimler in work due to be submitted this week - but, on balance, it's probably time to draw breath and take a look at the post apocalypse landscape that is Daimler AG.

Continue reading "Daimler: Ourselves Alone." »

Fuso and Fiat

Interesting piece here in Forbes Magazine suggesting that Fuso might be about to get out of the small engine business.

Is this an opportunity for Fiat Powertrain Technologies we ask ourselves? We have good reason to believe that it might be.

ZF: Good Kama.

More KaMAZ news - this time pertaining to its JV with ZF.

Which is getting something of a boost as the result of KaMAZ's decision to adopt ZF transmissions across its entire vehicle range. As a result, the The Tartastan-based ZF Kama JV plant will be expanded from 60 to 700 employees over the next three years.

Around 25 per cent of the transmission parts will come from local companies in Tartastan, but components will also be sourced from ZF plants in Bouthéon, France and Eger, Hungary.

ZF Kama was formed in 2005 and started producing transmissions in January 2006. Until now 9,000 Ecosplit transmissions have been assembled, but these meet just a fraction of total KaMAZ transmission demand. KaMAZ expects to produce 54,000 trucks this year.

May 21, 2007

Chery Distances itself from Chrysler Deal

We detect a bit of nose out of joint here.

Looks like Chery - the Chinese OEM that had formed a limited JV with DaimlerChrysler in order to produce Chrysler badged vehicles - is now considering its position.

Rather looks as if the Chinese had invested more faith in DC as opposed to D and C. Or could it mean that Chery had its eyes on Chrysler, and is a bit miffed that Cerberus turned out to be the preferred bidder?

Incidentally, we've now remembered where we've heard the name Cerberus before. Prior to becoming a private equity company, it was, of course, a three-headed dog in charge of guarding the gate to Hades, ensuring that spirits of the dead could enter, but none could exit.

Quite what this says about the market rumours suggesting that Cerberus will flip Chrysler back into the shop window pdq we are uncertain.

S&P Condemns MAN-VW-Scania Deal

Standard & Poors remains far from impressed by the idea of a merged VW-MAN-Scania combine, according to this report.

S&P is quoted as saying that the withdrawal of MAN's bid for Scania in Jan 2007 has reduced the immediate takeover risk, but it believes there remain negative credit implications from any amicable combination of the three companies. This could result in an entity with weaker business risk and credit characteristics.

25 Tonner for Mahindra/International JV

We tend to forget that International has a JV with Mahindra & Mahindra, the Indian OEM.

Called Mahindra International, it has - until now - given the appearance of being all mouth and trousers. But here is some concrete news; it seems that the JV's first progeny will be a 25 tonne truck, with a launch slated by the end of 2007.

The report makes reference to components sourcing, quoting an un-named spokesperson as saying that different vendors are being approached. We wonder quite where MAN may fit into this. It has a strong relationship with International in the US - vid the MaxxForce engine range - but also an infant JV with Force Motors in India - capable of around 20,000 units per year, based upon old MAN products.

Conflict of interest?

Daimler's Future

There is an interesting piece in the Wall Street Journal that talks of a future post-Chrysler for the Daimler operation.

This bit catches the eye: "The deal to relinquish 80.1% of Chrysler Group to private-equity firm Cerberus Capital Management LP -- approved yesterday by DaimlerChrysler's supervisory board, the equivalent of a U.S. company's board of directors -- will allow DaimlerChrysler to focus on strengthening its luxury Mercedes brand and on boosting its commercial-truck business. Mr. Zetsche said the company may seek deals to expand its truck business, known as the Truck Group, especially in the U.S. or India."

We are uncertain as to how Daimler might expand its US truck business through acquisition without bumping into a number of anti-trust issues. As far as India is concerned, we've made reference in the past to the then DaimlerChrysler aim of taking a piece of Eicher, maybe some of AshokLeyland, or simply establishing its own standalone truck operation therein.

One thing we can't quite work out at present is the likely direction for the Sprinter in the US. It is marketed both by Dodge and Freightliner, built from CKD kits by the latter, but sold mostly by the former.

We have to assume that the 19 per cent of Chrysler retained by Daimler makes reference to products such as the Dodge Sprinter. As such, buying into a Medium Duty OEM - such as taking on GM's apparently for sale MCV business - looks unlikely. But, the WSJ article makes reference to the recently acquired 24 per cent piece of Beiqi Foton - the Chinese OEM with a reckonable van business. A Daimler-branded Chinese low-cost MCV for NAFTA? Surely not.

So where is this additional US growth to come from?

Navistar, Fiat and GM: Discuss

Let's draw breath for a moment, and have a look at the rumours surrounding both Navistar and GM and Navistar and Fiat.

Continue reading "Navistar, Fiat and GM: Discuss" »

May 23, 2007

Renault Boosts European Plant Staff Levels by 500

A bit of news from Renault, which has announced that it is to boost staffing at its European plants by 500. We quote from the press release.

"To keep pace with the increased capacity soon offered by its production plants at Bourg-en-Bresse (Ain) and Blainville-sur-Orne (Calvados), Renault Trucks has decided to further increase its staff at these sites during 2007.

The recruitment plan will create 500 new jobs, 440 for blue-collar works and 60 for technicians and supervisors, who will all be hired before the end of the year. This will bring the total number of new staff employed by Renault Trucks in 2007 up to 1,250 (including 920 blue-collar workers).

The Blainville-sur-Orne plant, where 265 of these new recruits are to be employed, produces cabs for all Renault Trucks vehicles and assembles the Medium Duty range Midlum. The Bourg-en-Bresse plant, which assembles all Heavy Duty range vehicles (Magnum, Premium and Kerax), will be taking on 223 new members of staff."

Volvo Returns Cash to Stockholders

This Volvo Press Release may prove to have some significance down the line.

Continue reading "Volvo Returns Cash to Stockholders" »

Daimler AG: Takeover Target?

A couple of things get us out of bed in the morning.

Occasional victories over the forces of darkness are cool. So too is the discovery that our blatherings occasionally get support from people who know what they're talking about.

OK - Business Week may not be infallible, but it's pretty respected, and here is an article - originally from Spiegel - that brings into play the notion of a post-Chrysler Daimler becoming a target for a Private Equity-driven takeover. Something that we've been pointing out for a while now.

A while back, we questionned the likelihood of a split between D and C. Now we're happy to say that we called that part of it wrong, but our analysis at the time still holds good. If not better, in the light of the Cerberus deal.

Anyway, the Business Week piece is a good read, and it's also rather splendidly rude about Schrempp - a bonus.

Good stuff

May 24, 2007

New GM for Iveco Motors North America

Ted Bregar has been named as the new GM of Iveco Motors of North America.

So what, you may ask. So we think that IMNA - a Fiat Powrertrain Technologies Company - may yet prove to be a Trojan Horse so far as NAFTA truck business is concerned.

Fiat Considering Canning Nanjing JV

According to this report here.

But what does this mean for both NAVECO and Yuejin?

Volvo's Numbers

Volvo has released its Q1 results - delayed as a result of the acquisition of Nissan Diesel.

In headline terms, there's little that is unexpected here. We knew that the US market is plummeting, and here is evidence to confirm this view. Deliveries to North America slid 57 per cent in the January to April period to 9,964 units. The 2007 pre-buy writ large.

Deliveries to Europe were relatively robust. In the first four months of the year, they edged increased by one per cent to 39,101 units. Shipments to West Europe slipped by six per cent, but rose 44 per cent to Eastern Europe. Deliveries to South American customers were up by 18 per cent, to Asian customers by nine per cent, and to other markets by 12 per cent.

Very good - we had assumed that the North American market would be bad, and it is. And, according to these headline figures, the rest of the world carries the Land of the Free through the war zone that is 2007. Volvo predicts an upswing in US demand from Q3 2007.

We beg to differ. Take a look at this table:

numbers.jpg


This shows order intake during the first three months of 2007, and it depicts a disaster in waiting. With the exception of South America and Other Markets, Volvo's order intake is inching into the red across the board. Will the US market bounce back from an 80 per cent drop anytime soon? We rather doubt it.

Oddly enough, a piece of rather surprising economic news has been released in the US today. New home sales surged during April by over 16 per cent, a fact that has caused some marked confusion amongst the analyst community. This should be indicative of an economy tinged with a roseate hue. But when one reads that the median completion price has plummeted by 10.9 per cent, two words come to mind: Fire Sale.

Let us use a slightly tangential analogy for a moment. Back in the days of Command Economies and the Soviet Dream, meat tended to be in short supply. But occasionally, one could not move for the stuff. The reason for this tended to be simple; when thing's got really bad, Soviet farmers did not have the feedstocks to feed their livestock, and so they slaughtered them. Meat went to market, supply and demand came into play, and the price per piece plummeted. In the short term there was plenty, in the medium term there was famine. This seems to sum up the US housing market rather well at present.

Back to trucks. The one bright spot - for the European OEMs - in the otherwise distinctly murky gloom is Eastern Europe. Let's take a long hard look at this.
Try and buy a truck in Europe at present, and you'll be quoted a six-month lead-time. The reason - we'd opine - that registration figures are still positive in Western Europe at present is because the tail end of the Euro 4 / Digital Tachograph pre-buy is still in play. This has been exacerbated by marked demand increases within Eastern Europe.

Eastern Europe represents a limited time opportunity. OEMs are diverting line space away from Western European orders in order to make hay. Understandable, but ultimately temporary: indeed Q1 2007 figures for the Czech Republic show a decline in registrations of 17.7 per cent in the plus 16 tonne segment. The question here is thus: is this a reflection of a supply shortage, or a drop in demand?
We cannot see that it is the former. Total EU + EFTA Q1 registrations show a drop of 10.9 per cent. There should not be supply constraints, and so one has to assume that the Czech market has peaked. Given that the Czech republic is, along with Poland and Hungary, one of the big three new EU member states, this should be sounding a loud warning bell. If Eastern Europe is now maturing, where will demand come from next?

Of course, the OEMs point to increasing lead times in Western Europe as being indicative not just of supply issues, but of strong latent demand therein. We say this is nonsense, and it is our contention that these long lead times are not a reflection of people buying trucks, but of people buying build slots. If one is told that a truck can not be delivered until next January, one gets one's order in now in case things gets worse. A vicious cycle, with little logic behind it.

We maintain that the Triad Truck markets are as unhealthy as we've seen in years. The US is not going to come good anytime soon, and Europe's jail term is only being delayed by the blip that is Eastern Europe. Japan belongs in the sick room.

What happens when everything starts pointing downwards simultaneously? To our mind, it is no longer a case of if, but of when.

May 28, 2007

MAN, Freightliner Settle at £250 Million

MAN and Freightliner have settled their spat over the naughtiness at ERF.

Freightliner will pay £250 million ($496 / €369 million) to MAN AG in settlement. MAN had originally claimed £300 million, but this settlement means that not only will both sides avoid serious litigation costs - or more serious litigation costs.

May 29, 2007

Dr Z and the FT

We read the following in the FT over the weekend, and repeat it here word for word.

An interview with Dieter Zetsche focuses on the post Chrysler landscape for Daimler, and there are a couple of interesting observations made about the truck business.

Here we go:

(FT) What about the truck business?

(DZ) Everybody knows that we are very well represented in the key markets. We have made significant progress in Europe and to an almost similar extent in the US as far as our efficiencies are concerned. We are very close to benchmark in Europe with our European business or lets say Mercedes business, which includes our Latin American activities with Mercedes. We are a strong second in North America, so there we have to focus on closing the gap to the first. And last year we have been with a slight profit - slightly better than break-even in Fuso. So this is obviously the maximum focus has to go in order to reduce the dilution in the overall profitability coming from this part of our business. As far as growth is concerned, it seems that in Europe we are not only seeing a good phase of the cycle, but some structural growth of the market because of the expansion of Europe and the work share which creates transportation of goods. We of course want to leverage that structural growth potential -at that time very much limited our capacities as most of our competitors. Asia has significant growth potential. Of course it's not just volume we're struggling for but profitable growth and not in all areas - those volumes associated with very attractive margins. So we have to have the right cost position. And while some people might question the benefits of Fuso to us, this is certainly the only base to explore markets like India, for example, product wise. Not with original Fuso products but with localized products from that venue. And Latin America certainly is another opportunity, certainly not with the same dynamics as Asia or Eastern Europe. And in North America we see continued growth in a cyclical way. Unfortunately being even more volatile based on regulators' decisions. Still overall we continue to see basic growth of demand in this market as well. So overall the markets provide for a lot of opportunity for the truck side and we just have to continue to further increase our efficiency and be successful

(FT)Might you not unlock value by splitting the truck and car divisions?

(DZ) First different from the past, the truck industry seems to be as profitable as the car industry. So we do not have significant disparity of earnings streams on percentage basis between those two businesses. Secondly, if you think beyond a very short-term perspective, there is no added value to the investor by a split as long as we unlock the potential of our businesses. When we drive our truck and our Mercedes business at benchmark level, you might perhaps fast forward this value potential in our company by just basing on the expectation a short-term gain. But once again, if you trust in the capability of this management, this potential will come at least and we are convinced more than that by us from this business. On that basis, I do not see a benefit for the majority of our shareholders, other than the ones who have a three-month perspective, in splitting the company.

(FT) Are you worried that you're vulnerable to outsiders like private equity coming in and thinking they can run the business better than you?

(DZ) For sure we feel dramatically less vulnerable than we had been five months ago. At least whoever would try to interfere would have to answer the question why the hell he missed 30 billion and now with much more effort goes for much smaller potential price. There's no certainty in business. It demands from us striving for top performance all the time, which I consider something good, not bad. Therefore I don't feel uncomfortable with our shareholder structure.

(Our take) What do we learn from this? Firstly, Private Equity companies are not welcome. Doesn't mean to say that they won't be descending on Stuttgart though - it will be interesting to see how DZ can keep them at bay, not least as a result of the fact that the primary bar to shareholder interest - namely the Chrysler stake - now seems likely to be sold. Secondly, Fuso has not got long to get its sh*t in order. Thirdly, the on-off internal idea about spinning off the truck business now seems to have retreated some way from the front burner.

More will no doubt follow

May 30, 2007

Volvo - NDM Deal Delayed

News http://www.bymnews.com/news/newsDetails.php?id=9316 that Volvo will not be able to redeem its already exercised option in Nissan Diesel until at least the end of August.

But given that the option was exercised - we believe - simply in order to spike Christer Gardell's guns, we assume that this is no great loss to Gothenburg.


May 31, 2007

GAZ In Tunisian Talks

GAZ is negotiating the establishment of a minivan production facility in Tunisia, according to this report.

No mention is made - yet - of any LDV involvement.

June 1, 2007

MAN Bags 1000 Unit Russian Order

MAN has won an order for 1000 TGA heavy trucks from a Russian leasing organisation.

A contract has been signed by the Russian JSC TransKreditBank and MAN's sales subsidiary MAN Avtomobili Rossiya, which will see 800 MAN TGA 18.390 and MAN TGA 18.480 4x2 BLS with an LX cab and 200 XLX cabbed variants being delivered.

The vehicles will be leased by the JSC TransKreditBank to large Russian transport companies like Sovtransauto, Navigator, D-Trans and further members of the Association of International Road Carriers (ASMAP), and are likely to be used both for long haul national and international work

DCVD Takes on German Fuso Sales Role

DaimlerChrysler's German Sales Organization (DCVD) will assume control of wholesale operations in Germany for the Mitsubishi Fuso brand on today, June 1st. DCVD is taking over this responsibility from the Mitsubishi Motors Deutschland (MMD) import company, and MMD's existing Mitsubishi Fuso sales network will be integrated into DCVD, thereby making the brand's vehicles available at a total of 80 authorized dealers, 17 of which are DaimlerChrysler outlets, with the other 63 operated by contract partners.

Integrating Fuso into Daimler's truck business has proved to be something of an onerous task, and yet Fuso is in the vanguard of Daimler's push into markets such as India. Of all of the challenges currently facing the Daimler CV business, this is possibly the most important - and the most pressing.

Hino, Ireland and BioDiesel

Intriguing piece here that details initiatives being taken in Ireland to encourage the adoption of Bio Fuels. Particularly notable is the news that a new Bio Diesel-friendly Hino is undergoing the latter stages of development.

Our views on Bio Fuels are plain. We don't like them, and, as this piece in the Japan Times makes clear, they are a far from a silver bullet


June 3, 2007

VW and Scania

Interesting piece in Forbes detailing VW's decision process - or lack of the same - with regards to Scania.

What catches our eye is the focus on Eastern Europe. No one doubts that this region is motoring ahead at the moment, but, to our way of thinking, it is - in the long term - not that significant. Re-equipping the Eastern European vehicle parc is a job for the short and medium term, but there seems to be an increasing amount of long-term optimism being pinned to the place. We see this as misplaced.

That aside, VW has to do something. It owns in excess of 36 per cent of Scania, and yet Scania appears to regard VW as a hindrance rather than a benefit. We detect bad blood. A forced merger between VW's truck business and Scania would make little sense - and yet that seems to be the only option left. MAN's role in all of this remains unclear, but it has become very much the junior partner. Once again, we have to wonder if the three principles - VW, MAN and Scania - had set out to create a yardstick M&A fiasco against which all others would be measured, would things look any different?

We think not.

Iveco, FPT and North America

More on Iveco's plans here.

Fiat's truck making arm has been candid about its search for a US partner. Here is news that it is also keen to take a look at Russia too. It has an ongoing relationship with UralAZ, and maybe it's looking to strengthen this.

The US remains something of a conundrum though. Restructuring means that Iveco is just a truck assembler. Its engines come from Fiat Powertrain Technologies. It is this company that we regard as a more appropriate market entrant for the US Class 8 business, through a stake in Navistar. International and Iveco would - between them - offer FPT considerable volume opportunities.

June 7, 2007

French Government to Sell Renault Stake?

Le Monde has just deposited a large cat amongst a group of pigeons with this report.

Speculating that the French government would sell its stake in Renault SA back to the company, the piece suggests that such a move would cause Renault to get rid of its stake in AB Volvo - some 20 per cent valued at around €7 billion.

We've wondered about this for a while, and the likely consequences of such an action. We have grave difficulty in understanding Renault VI's role within the AB Volvo combine; it seems to be a parochial brand in Europe, and an occasionally useful vehicle for deals with the likes of GAZ.

Two things interest us here. Who would buy 20 per cent of AB Volvo, and what would AB Volvo do with a Renault VI brand that it has little need for?

June 8, 2007

Daimler, Trucks and India

We have reported on Daimler(Chrysler's) intentions towards India in the past.

And here is a rather good article that brings us up to date.

Paccar, DAF and TCH

Paccar's decision to buy Truck Center Hauser and to integrate it into the existing Paclease operation seems like a pretty shrewd move. DAF is often seen as boasting a coherent European business, but the reality is rather different. The Dutch offshoot of Paccar is all-powerful in the United Kingdom and Benelux, but much of its European business is somewhat incidental.

TCH operates a 1200-strong fleet, consisting at present primarily of MB and MAN products. We assume that this duopoly isn't going to last, and this move should offer DAF a significant bridgehead into Europe's biggest truck market. More to the point, it might do something to focus the German DAF network's mind, and would therefore be a consummation devoutly to be wished according to our sources.

We would assume that someone at DAF is now looking closely at the Southern European markets with a view to a similar deal. Extending OE business down the chain is a good way of developing significant extra volume, and, more importantly, better visibility.

But there is a flipside to this. Taking the example of the UK, we can see that a fair bit of DAF's business is to the rental and leasing fleets. These companies would probably take some exception to an OEM - and a supplier - horning in on their patch. Volvo's experience with BRS in the UK is a useful reminder of what could happen.

As such, DAF needs to manage this approach very carefully. Leasing firms wield considerable influence within the European transport business, and are not customers to upset.

MAN to Settle Chinese Action?

Some time ago, we reported on MAN's difficulties with Chinese OEM Zonda.

According to Handlesblatt, quoted here by Bloomberg, this now seems to be approaching settlement. We've said it before about China, and we'll say it again here. When doing business in the People's Republic, pack an extra pair of socks.

Because, if that's all you're left standing in, you'll want to look your best.

June 10, 2007

Scania and Emerging Markets

This news concerning Scania's agreement to enter into a partnership with a Chinese bus bodybuilder may seem to be somewhat incidental.

But we think otherwise. Looking at Scania's approach to the two major emerging markets - India and China - one sees that it has adopted a low risk, low cost policy, and this seems to be very appropriate. Scania already has a sales operation for its heavy truck range in China, but these products are positioned at the premium end of the market, and there is no local partner involvement.

Both the Jiangsu Alfa Bus and the Larsen & Toubro Limited deal in India - and, for that matter, the agreement with Iranian bus producer Oghab - suggest a business model based around cautious, partnership-driven growth in the Emerging Markets and this seems entirely appropriate.

We're beginning to wonder about the notion of the global OEM; it seems that the world might not be quite ready for a business structured beyond a regional level. Scania's approach seems to offer many of the benefits of a global company, but with far fewer pitfalls.

June 11, 2007

Fiat, Iveco and Forbes

We assume that this is an example of bad sub-editing - something of a surprise given that Forbes is usually pretty accurate - but would imagine that describing Iveco - even in parentheses - as Fiat's 'light commercial vehicle unit' will have done much to irritate one or two in Turin.

Renault SA and AB Volvo

Renault is denying reports published in the City AM freesheet that it is in talks to buy bits of PAG from Ford. PAG - Premier Automotive Group - is the Ford division that operates the Land Rover, Jaguar and Volvo brands.

Continue reading "Renault SA and AB Volvo" »

Shareholder Group Seeks removal of VW from MAN Board

We missed this one first time around, but here's news that the Schutzgemeinschaft der Kapitalanleger (SdK) - a German group that protects shareholders' rights is to go to court with a view to force the three VW representatives from MAN's board.

The SdK's stance is that there a significant conflict of interest: "VW wants to merge its truck business with MAN in an alliance which would apparently also include Scania. One can assume that it would be difficult for VW to represent the interests of MAN," according to its spokeswoman.

June 12, 2007

Cummins in China, Houses for Rent in Spain

Cummins has started to develop a new Fuel Systems plant in Wuhan, China, according to this report.

Although the site is the thirteenth Cummins operation in China, the Wuhan facility is significant in that it is the first Fuel Systems plant to be opened outside the US. Cummins - not least as a result of its XPI work with Scania - can probably justify a claim to technology leadership in this sector.

Continue reading "Cummins in China, Houses for Rent in Spain" »

June 13, 2007

FPT Seeking Non-Captive Business for 1.9 JTD Engine

Here's a press release from Fiat Powertrain Technologies, describing the launch of the 1.9 JTD turbo diesel engine.

But what catches our eye is the news that it will be made available to both captive and non-captive customers - albeit at the lower, 180 bhp rating to the non-captive customer.

Who are these non-captive customers? We reckon this unit is van and light CV bound, and suggest that there's a very plausible reason for looking both just north of Turin, and, by extension, a long way to the east. But we wouldn't look too closely at either China, India or Korea on this journey.

June 14, 2007

Volvo to Delist from NASDAQ

AB Volvo is to apply for the delisting of its ADR's (American Depositary Receipts) from the NASDAQ exchange. Its shares will now only be traded on the Stockholm Stock Exchange. Volvo's ADR's - corresponding to B shares - have been traded on the NASDAQ since 1985.

Of course, this means that AB Volvo will now no longer be under the scrutiny of the SEC, and, possibly just as importantly, its now very significant dealings with SAIPA in Iran will remain less affected by any possible sanctions levied against the Ahmadinejad regime.

And, of course, this is another example of a reversion to regionalism amongst truck OEMs. The reason for the trading of AB Volvo stock on multiple exchanges has always been given increasing international ownership. With the NASDAQ delisting following similar moves in Japan, Germany and the UK, we wonder what this says about the notion of the global truck OEM. Now we await a decision by the French government regarding its stake in Renault SA, and a subsequent decision on the part of Renault SA reference its 20 per cent of AB Volvo.

Good. We were begining to get bored.

No US:Fiat JV - Marchionne

Well this has got us confused.

"In a few days we will announce new joint ventures, none of which -- and this is a scoop -- include American partners. I can't say anything more, or there might be trouble, because when I tell it to Corriere Canadese / Tandem it's as if I told ANSA. Moreover, your website is perfectly visible from Italy, and many people read it. I do so myself, through my assistant who lets me know when an article might be of interest to me, whether as a business manager or as a former Torontonian. And there's always my mother, who subscribes and keeps me up to date."

The mother in question here is Mrs Marchionne, whose boy, Sergio, has been doing rather well for himself at, and by extension, for, the Fiat Group.

We know that JV's are in the pipeline. But what's this about no American partners? We had figured Navistar as an obvious route into the US market for Iveco - vans - and Fiat Powertrain Technologies - engines.

But no US companies is the message handed down to Corriere Canadese, and so we'll start looking elsewhere. FPT is about to announce a big - and maybe rather surprising supply deal - and we're going to leave it at that, but, as for the rest of the job, we're perplexed.

June 19, 2007

DC and FPT in Strategic Supply Deal for Canter

We've been trailing it for a while now, and here, finally, is the news that DaimlerChrysler and Fiat Powertrain Technologies have struck a major supply deal.

And here's the press release.

The DaimlerChrysler Truck Group and Fiat Powertrain Technologies (FPT) announced today to have concluded a strategic co-operation agreement in the field of powertrains.

The first step of this agreement concerns the long-term supply of light-duty diesel engines (FPT F1C) to the Mitsubishi Fuso Bus & Truck Corporation (MFTBC), to be used in the Canter light commercial vehicle, which will be marketed in major markets, including Europe and Asia.

FPT will supply around 80,000 F1C engines per year to Mitsubishi Fuso starting in 2009. The supply volumes will increase over the following years.
The engine is a Common Rail Diesel engine, with displacement, rated 177 Hp at 3,500 rpm and a torque of 400 Nm at 1,400 rpm. Thanks to the optimized design of all engine components and to the advanced technology of its injection and turbo-charging systems, the F1C engine guarantees excellent performance and fuel consumption. The F1C engine is currently manufactured only in Foggia, Italy, but production in an additional site will shortly be started as part of the globalization of FPTs footprint.

The current Canter generation was introduced in 2002 and is one of the most successful light-duty trucks in - sold over 132,000 times in over 106 countries world-wide. Its great success and Mitsubishi Fuso's core competence for such vehicles makes MFTBC the world-wide Competence Centre for light-duty trucks within the DaimlerChrysler Truck Group.

Within the framework of this strategic supply-agreement the two companies are also investigating further potential business opportunities in other markets, including South East Asia.

"This agreement is a key step in our strategy aimed at developing strategic partnerships in all sectors of the Group" said Sergio Marchionne, CEO of Fiat Group. "Our ability to partner with DaimlerChrysler is confirmation that the decision to carve out our powertrain activities as a separate sector two years ago was the right one, and that we have products and technical skills to satisfy the needs of a demanding market."

Dieter Zetsche, Chairman of the Board of Management of DaimlerChrysler AG and responsible for the Mercedes Car Group, said: "Today's and future emission regulations demand a high level of investment and technological specialization. This agreement provides a value added for both companies, Fiat Group and DaimlerChrysler ."

Andreas Renschler, Member of the DaimlerChrysler Board of Management and responsible for the Truck Group, added: "Today is a milestone for the DaimlerChrysler Truck Group in many ways. With this alliance we have reached the best decision for our Fuso customers as we will offer them the most modern, technologically advanced and ecologically friendly light-duty engine for their businesses. And the engine will deliver high performance combined with highly competitive fuel efficiency."

"This agreement witnesses the level of our technology and supports the strategic role of FPT in expanding its business outside the captive market" said Alfredo Altavilla CEO of Fiat Powertrain Technologies. "We trust this supply agreement can be the first step in a long-lasting and mutually satisfactory cooperation in further selected projects."

What do we think? This is a stellar deal for all concerned. It removes a vast amount of costs from Fuso, and places it in a position whereby it can promote the brand further into both emerged and emerging markets with a far lower cost and risk base than before. It also sends a very prominent message to Fuso in terms of its place in the DC organization. Not integrating is not an option.

For FPT, 80,000 units per year as a start is good business, and the deal offers the potential for an Asian supply base. Investment should be easily possible at these sort of numbers, and this is a major springboard for growth.

We're checking what this means for the NAFTA markets and both MF USA and Sterling. We assume that the former will receive the new engine, and it would make a whole load of sense were Sterling to do likewise. What also remains to be seen is quite where Fuso's hybrid programme fits in here. Fuso is a centre of excellence for hybrid research, and this deal will free up a lot of manpower allowing this technology to be pursued yet further. Would FPT benefit from this? That is an interesting possibility.

Volvo's Capital Markets Day

Our correspondent, seated front row centre at Volvo's Capital Markets Day in Gothenburg, dashes out for a bit of emailing, and reports that Leif Johansson has just spent around a third of his presentation speaking of Eastern Europe - which accounted for seven per cent of Q1 sales - but failed to mention North America once.

Of course, speaking ill of the sick is unseemly, and Johansson does not do unseemly.

Volvo to Export from India to China

Volvo's adventures in China have hardly been the stuff of a good night's sleep. The CNHTC disaster is yet to be resolved, and now the Swedish OEM has Dongfeng-Nissan Diesel to play with as well.

Hardly surprising then that it seems to be looking to use its Indian operation as a supply source for China. Never pick a fight that you can't win seems to be the moral of the story.

More from Volvo's Capital Markets Day.

Deputy chief executive Jorma Halonen said the realisation of the synergies from the Nissan Diesel acquisition are going 'slightly ahead of plan' and will surpass the expected annual €200 million after five years.

Halonen said he believes Nissan Diesel can 'double' its export volumes. In 2006, Nissan Diesel exported around 23,000 trucks, around 3,000-6,000 more trucks than the domestic sales.

MAN Seeks Tripling of Russian Business, May Build CIS Facility

MAN expects to see its Russian business triple this year, with this report predicting sales of 4,000 trucks during 2007, up from the 1,570 vehicles sold during 2006. The company may also open an assembly plant in Russia - 'sooner or later'.

MAN forecasts industry-wide truck sales within the Commonwealth of Independent States, an association of former Soviet republics including Russia, will grow 80 percent to 180,000 vehicles annually in 2010 from 100,000 in 2005. We remain a bit uncertain of this forecast; it does seem very optimistic, and much of the growth seen at present is just that - growth. This has to slow down at some point, and, like other markets, Russia will lapse into a replacement cycle business. We'd also point to the fact that the Russian OEMs - most notably KamAZ - are now getting their act very much together, and so any European OEM looking for a slice of the pie will have a fight on its hands.

Russian Finance Minister Alexei Kudrin indicated yesterday that the Russian economy is likely to grow by 6.7 per cent this year, but OECD statistics suggest that things may be calming down a bit.

July 4, 2007

Iveco's Strator Gets Official?

Does this set of pix suggest that Iveco might have rather larger and more Turin-based plans for the Strator conventional than previously thought?

This looks very much like official All-Black livery to us. Whatever next - a Mercedes-Benz Cascadia?


STRATOR_ALL_BLACKS_FOTO_450%5B1%5D.jpg

July 5, 2007

Rába, GAZ and the Future of the World

News here that Rába Axle Manufacturing Ltd has signed a €67 million supply deal with GAZ.

What to think of GAZ at the moment? It has already spent $1.54 billion on a piece of Canadian components firm Magna, and we reckon that it is due a big buy in the none-too-distant within the EU. Its deal with Rába could be seen as a consolidation of commodity component capacity – something that could fit rather well with the demands of a EU-based truck manufacturer. Oleg Deripaska could write a cheque for just about any number and still pay next month’s gas bill, and so the list of possible targets is a lengthy one. In other words, we wouldn’t bet against anything. And, interestingly enough, according to this report, ex Ford financial man and latterly Volvo Car strategy chief Andrzej Kasperek has just taken Deripaska’s shilling as well.

It all rather looks like a giant waking up.

July 6, 2007

A Route to Market for Non-Triad OEMs

South African Super Group is obviously taking its deal with Shaanxi very seriously, according to this report, which details plans for a new production line and a whole load of investment.

But our curiosity is awakened by the fact that 78 per cent of Super Group’s revenue accrues from providing transport services – it is one of South Africa’s largest 3PL providers.

So this is a deal between an OEM and an end user. Nothing strange in that, but, reading between the lines, it’s a deal that has been driven by the end user, rather cutting out any of the existing players in the South African market.

Given the growth of the mega-fleets worldwide – UPS, FedEX, Schneider, JBH, Willi Betz et al, can we draw any conclusions here? Let us suggest a situation in which huge providers of transport as a non-core business – big retailers with own account fleets for example – look around for similar partnerships with non-traditional equipment providers – from an EU / US perspective, for non- traditional read emerging markets.

Is this the way into the Triad for China, India and Russia?


More Volvo Tomfoolery

The notion of management succession is one that intrigues us. Truck companies need it, and yet quite a few don’t have it – or rather, don’t have any obvious succession plans in place. MAN seems to suffer from this, as does Volvo.

Earlier this week, we received the following release from Volvo - or, more specifically, Volvo Truck Corporation, European Division:

ROAR ISAKSEN TO LEAVE VOLVO TRUCKS

The head of Europe Division - Roar Isaksen – is leaving Volvo Trucks to take on a new position as President and CEO for the Plastal Group AB.

During his five years as head of Europe Division, Roar Isaksen has been responsible for the implementation of a new company culture and structure according to the Retail Strategy.

Roar will remain in his present position until his replacement has been appointed, early this autumn.

All well and good, and we wish you well Roar. And then this morning, three days later, up pops another official press release, informing the world that one Claes Nilsson is Isaksen’s replacement. Surely it is not only we who can see the irony in the fact that Nilsson used to be head of strategic planning.

Why ironic? Because this nonsense suggests a complete absence of a plan, strategic or otherwise. Isaksen throws in the towel and is asked to stay until a replacement can be found – early this autumn. Strike one for bad management thinking – no successor in place for the Head of European Truck Business – Volvo’s biggest single market.

Strike two – demonstrate to the world just how chronic one’s management planning is: two utterly contradictory press releases in the space of three days makes a mockery of Volvo’s corporate thinking. We’ve often wondered if the company’s success has come about more by luck than judgment. We’re now pretty convinced of the fact.

Volvo, Freightliner Plants on Strike

This looks unfortunate.

Seems like workers at Volvo’s plant at Oostakker, Belgium have downed tools over a pay claim. Given that the same thing is happening with Freightliner too, we seem to be in a summer of no little discontent.

July 9, 2007

VW-MAN-Scania, Jaundice and Big Lorry Blog

Possessed as it is with a symptomology not dissimilar from that displayed in cases of Malaria, the Scania-MAN-VW nonsense flares up again, leaving us feverish and irritable.

Speaking at the sidelines of the Truck Grand Prix at Nuerburgring – itself another abundant source of prejudices for this blog - Samuelsson said that a solution would be best in which both companies remain 'on eye level with each other' and where both hold on to their separate identities.

There are no talks between the two companies at the moment and that they are going through a 'cooling-off' phase, which is necessary after MAN's thwarted takeover attempt, HS is quoted as saying

Once again, we point to the abject stupidity being displayed by all concerned here. This is Montague and Capulet territory, or, for the more scientifically minded, oil and water. The notion of Scania and MAN remaining on eye level with each other is an intriguing one; we assume it is to facilitate both the giving and receiving of rude hand gestures between the two. If it works out, expect Jeffery Archer to win the Nobel Prize for Literature. We stand by our view that this deal would have been allowed to die the death were it not for VW’s Dr. Piëch and a combination of - shall we say unconventional - thinking allied with a fair chunk of vanity driving it forwards. One contemplates the notion of a MAN – or Scania - Phaeton tractor unit aimed at the more plutocratic end of the sector, and retreats from the prospect assailed by a dazzling panoply of emotions. Nausea and deep depression feature strongly.

Anyway, in other news, let us pause to welcome Big Lorry Blog to our happy band of indentured labourers. A Garrison Keillor amongst truck bloggers, BLB always has something to say, although his tendency to pursue middle market appeal – though common in these troubled times – is, we would consider, somewhat regrettable. (15 all Weatherley, new balls please.) No doubt as the new boy is still getting to grips with the beauty that is Movable Type software, Salter has had his lunch money and Shiers is waiting for him with evil intent in the lavatories. Leaving aside such fripperies, go take a look.

Big Lorry Blog

July 10, 2007

Volvo, Freightliner Plants Back to Work

If these reports are to be believed, it looks like the strikes at Volvo’s Belgian facility, and Freightliner’s Portland plant are both heading towards resolution.

Renault Strikes Assembly Deal with Karsan

We receive the following press release from Renault, detailing a new deal struck with Turkish assembler Karsan.

Stefano Chmielewski, President of Renault Trucks, and Inan Kirac, President of Karsan, announced the cooperation agreement for the assembly of trucks destined to the Turkish and neighboring markets, signed on July 9th, in Lyon (France).

In accordance with this agreement, Karsan will produce from 2009 in its Bursa Plant models of the Premium Route (Long Haulage), Premium Lander (Construction site access) and Kerax (severe use) ranges. These vehicles will be distributed through the Renault Trucks network in Turkey and in the neighboring countries.
Karsan, industrial partner of many automotive manufacturers, has a workforce of 817 employees and built 12 500 vehicles in 2006. There will be a yearly production capacity of around 5 000 units put at the disposal of Renault Trucks.
Renault Trucks wants to reinforce its presence on a regularly increasing Turkish market with vehicles completely adapted to the requirements of transport specialists and produced by Karsan in the full compliance with the highest quality demand.
In 2006, The Turkish market for over 6 t vehicles was above 40 000 units.

July 11, 2007

UBS Sees DCX Truck Business Restructuring as ‘Inevitable’.

This Research Note appears to argue that the Daimler-Chrysler dissolution will herald further changes in the Daimler structure, and UBS has hiked its target price from €75 to €90 accordingly. Is UBS thinking thoughts of Private Equity?

Coming on the heels of yesterday’s change of direction on AB Volvo by HSBC, the entire truck sector looks set to feel the warmth of the market’s spotlight on the back of its neck for some time.

MAN, NeoMAN and Synergies

News here that MAN is to restructure its Neoman bus business.

And why not, say we. But, the thing that catches the eye is the notion of bumping up synergies between bus and truck. To our way of thinking, MAN should be positively salivating at the prospect of the synergies likely to accrue from its Scania relationship. But it isn’t.

Suggesting to us that MAN-Scania has got very messy.

Another Renault Press Release

Another press release from Renault. Like buses, you wait ten years for one, and then they all come at once. But we digress.

This one talks about recruitment. Enjoy.

The Bourg-en-Bresse assembly site will be recruiting 450 people on permanent contract this year.

For the third consecutive year, Renault Trucks is embarking on a major recruitment campaign for its Bourg en Bresse truck assembly site. In 2007, 450 additional employees are to join the site, with 400 operators and fork-life truck drivers and 50 or so technicians, managers and executives.
An information campaign has been set up with the national employment agency (ANPE) both regionally and nationally to attract new skills. This will come in the form of TV reports and ads in all ANPE agencies.
Furthermore, specific partnerships with the ANPE, the AFPA (national adult vocational training association) and the local Bourg en Bresse training centre (ADEA), will bring people onto the site under vocational learning contracts (contrats de professionnalisation) and return-to-sustainable-work programmes (contrats d’aide et de retour à l’emploi durable).
In three years, the site will have taken on 800 people on permanent contracts (CDIs) and become Europe’s second largest heavy goods vehicle assembly site, taking all makes into consideration.
As the biggest employer in the county of Ain with 1,500 people on its books, Renault Trucks assembles three-quarters of Renault brand trucks, comprising vehicles from the heavy duty range, the Magnum and Premium Long Distance, Premium Distribution, Kerax and Lander (Construction). At the beginning of July, the site beat all previous production records by assembling over 200 vehicles per day.
The site’s organisation is based on a production system that involves continuous improvement, team empowerment, transversal working, just-in-time and self-quality.
Apart from the assembly of heavy duty ranges, the site is also home to the Customer Adaptation Centre, whose job it is to develop specific programmes to cover all demands (representing between 30 and 40% of volume). The adaptation centre fits and adapts almost 1,000 vehicles per year for specific heavy goods vehicle needs and more complex projects such as the Dakar Kerax, multi-axle models and oil exploration.
Bourg also has a CKD* business, which delivers vehicle component and units to foreign assemblers (Renault Premium and Kerax), to be assembled directly in those countries.

July 12, 2007

Marchionne Upbeat about Q2, China

Trailing Fiat's Q2 results, Sergio Marchionne is quoted as saying everything is on target, according to this report.

He is reported to have said that he expects Iveco to be able to announce good news in 2009 regarding the production of medium and heavy-duty trucks in China.
Iveco is expected to produce nearly 100,000 vehicles this year in China, boosting production to about 160,000 over the next three years.


MAN to Exceed 2007 Sales Target?

According to this report – which quotes the head of commercial vehicles unit Anton Weinmann - MAN AG is likely to exceed its current 2007 unit sales target of 96,000 vehicles, with sales of at least 97,000 trucks and buses,

“We'll surely have 90,000 semi-trucks and one can assume that there will be more than 7,000 buses. Together it will, in any case, be at least 97,000,”Weinmann said.

MAN production head Lars Wrebo already said in an interview in June that selling 92,000 trucks this year was a distinct possibility.

In addition, Weinmann said that the 2010 target of unit sales of 100,000 vehicles might be surpassed in 2008, confirming comments by Wrebo.

“We are anticipating that we will be able to sell 100,000 units. If the current conditions continue, than I see achieving this target next year as very likely,” he said.

Weinmann said that demand in Germany, but especially in Eastern Europe was strong and was pushing the truck maker to its production limits. “Incoming order are now for 2008 and we are doing quite well.”

But Weinmann said that the truck maker is now working 20 out of its 21 possible employee shifts per week at its Nuremberg plant.

Last year, MAN had worldwide sale of 79,822 trucks und 7,338 buses.


July 14, 2007

Hyundai Mulls Eicher Stake - Report

This could get very amusing.

This report from the Times of India – which we’ve just cut and pasted below - suggests that Hyundai is looking to take a piece of Indian OEM Eicher. Nothing strange there – everyone wants a piece of everyone these days. However, DaimlerChrysler is believed to be exploring ways of leveraging its 3.6 per cent piece of Eicher – held through Mitsubishi Fuso – with a view to entering the Indian Light Duty market.

Not so long ago, DCX and Hyundai were best of friends. Then it all went horrible. And now, it looks like they’ll be seeing each other again. And so the world turns.


Continue reading "Hyundai Mulls Eicher Stake - Report" »

July 19, 2007

LDV in Profit, GAZ in the Market?

According to this report, LDV is back in profit one year after its takeover by GAZ.

But, of course, the question has to be – what will GAZ do next – how does a piece of AB Volvo sound?


Volvo to Buy MAN - Again.