Volkswagen start in Brazil

The repositioning of Volkswagen has begun with the German carmaker selling off its truck and bus manufacturing capacity in Brazil to MAN, a company of which they still own 20%. The sale, worth US$2.4 billion, has been announced this week and will take effect in the first quarter of 2009.

As a result of this move it is still not clear how Volkswagen envisage the final structure of all of the companies they own. By divesting themselves of their South American interests in the truck and bus market they appear to have stepped away from the plan they were talking about last year of creating a global truck manufacturer using the assets of both Scania and MAN plus their own commercial vehicle interests in both South America and Europe.

Now, they are clearly defining a line between their light commercial vehicle interests i.e. their van ranges and the manufacture and sale of larger heavy duty vehicles. In this statement about the sale of  VW trucks the company made it clear they will continue with Volkswagen commercial vehicles, based out of Europe and concentrating on the van market in which they have already been quite successful.

The question is what they intend to do with both Scania and MAN. Scania have, historically, been a very independent company and would wish to continue as such. VW appear to have listened to the advice of Scania CEO Leif Ostling and seem likely to leave well alone as long as the Swedish truck maker continued to make large profits.

This leaves German truck maker MAN as the joker in the pack and they appear to have been told by Volkswagen they are to be a global truck maker.

The question remains about what Volkswagen intend to do about two companies competing head-to-head in the heavy duty truck market in Europe. There do not appear to be many synergies available between the two companies, but also, there does not appear to be much value in allowing the two of them to fight it out for market share in a very tight West European truck market.