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.

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.

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.

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

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?

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 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.

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 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.

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.

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.

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.

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

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.

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.

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?

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.

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.

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.

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.

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.

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?

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.

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.

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?

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.

News of a flurry of activity in China reaches us.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 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.