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PA IN THE MEDIA

French logic

Mark C Schneider
Handelsblatt
6 March 2008

Summary

A double deal in Wolfsburg and Zuffenhausen has shaken the automotive industry - VW's deal with Scania, and Porsche's deal with VW.

Industry leaders are questioning the industrial logic behind them. It is clearly Wiedeking's task to reduce VW to a manageable size by incorporating important subsidiaries into Porsche Holding. But how will VW and Scania be managed - Scania's CEO becomes a member of the VW board, followed by MAN's CEO in order to help integrate MAN as well?

Synergies are certainly achievable between VW's commercial vehicle business, Scania and MAN, enabling them to become number one in Europe: Scania developing the technical platforms, the next generation of MAN trucks becoming integrated, and all benefiting from the combined purchasing power.

Experts from PA Consulting Group estimate the cost savings in purchasing at around 15% of current volume. But PA's experts say there are many questions to be answered. How best to integrate VW's light trucks into the new group? When to take over MAN? How to improve the weak presence in the USA and Asia? The right answers to these questions could create a compelling industrial logic.

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