MAN/Sinotruk: partnership with wider implications?
What does MAN's planned acquisition of 25% of Chinese heavy truck producer Sinotruk tell us? The headlines say that MAN is to pay €560m (US$790m) for the 25% stake plus one share in Sinotruk and that MAN will license its TGA truck, engine, chassis and axle technologies as a basis for the production of a new truck series at Sinotruk's existing plants in China. However, they offer very little by way of real guidance in terms of future direction.
Looking at wider issues, this surely has to be seen as game over for the MAN – Scania experiment. It is extremely difficulty to see how VW could leverage Scania, MAN, VWCV Latin America and a significant holding in Sinotruk into anything that resembles a coherent operation. As such, something has to give.
The Scania and VW relationship looks to be a relatively comfortable situation. In time, Scania could well get VW's LCV range, and at least some modicum of synergistic rationale can be seen behind the maintenance of VW's stake in the Swedish OEM. Where it gets out of hand is with the addition of MAN to the mixture.
As a result, there has to be considerable doubt that this is the end of the matter. A further investment looks likely to take place and it may well involve Sinotruk's parent – China National Heavy Duty Truck Corporation (CNHTC) – taking a stake in MAN. Should MAN's acquisition of its Sinotruk stake be regarded as some form of dowry payment, with a full wedding likely in the future? It seems possible.
One of the key beneficiaries in this scenario could be AB Volvo. The MAN-Sinotruk deal could provide the impetus to move the AB Volvo – CNHTC JV in the right direction; namely to consign it to the history books. If AB Volvo extricates itself from the CNHTC deal at little cost, then it can both celebrate its very good luck, and also look to develop the long-awaited deal with Dongfeng. And, of course, any deal between AB Volvo and Dongfeng will serve to place Nissan Diesel's bed a lot closer to the door.
This is very much wait-and-see territory; that this is happening at arguably the worst point in the business cycle suggests that what is visible and what is actually happening are two very different things. What will emerge over the next few months remains to be seen, but it does seem that Ferdinand Pich's ambitions in the truck business might have now been trimmed.
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