VW said to plan merging components units, weigh asset sale
VW’s senior management presented a plan to the supervisory board yesterday and may announce the steps as part of a presentation tomorrow, said the people, who asked not to be identified because talks are private. Volkswagen officials declined to comment.
The steps make “perfect sense,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “The financial market still doesn’t seem to realise that there is more going on at VW than some people might think.”
Volkswagen’s shares gained 2.3 per cent to €121.80 (RM560.12) at 9.07am in Frankfurt. The stock has rebounded about 40 per cent since hitting a post-scandal low in October.
The diesel scandal, which has rocked VW since it admitted in September to cheating on emissions tests, has forced the company to make cuts as it faces billions in fines and expenses to fix as many as 11 million cars.
Mueller’s strategy update is aimed at moving the company beyond the worst crisis in its history. He’s already acknowledged that VW is too unwieldy and too static, and needs to catch up on technologies such as car-sharing and electric vehicles.
The carmaker plans to merge the components units of each brand into one new entity that would include about 70,000 employees at more than two dozen locations worldwide, allowing it to trim spending and boost efficiency from a single management and unified strategy, said the people.
The reorganisation resembles moves by pre-bankruptcy General Motors Corp to create Delphi and Ford Motor Co to establish Visteon.
Those US auto-parts companies were later spun off. Currently, there are no plans to spin off or sell the new VW components unit, one of the people said.
VW was a pioneer more than a decade ago at pooling manufacturing resources by sharing platforms for similar cars from its different ranges, which include the namesake brand, as well as the luxury Audi marque, Czech Skoda Auto and Seat of Spain.
In all, Volkswagen owns 12 brands.
Portfolio review
VW is also likely to announce plans for a portfolio review, which could lead to the sale of non-core assets, said the people.
While no decisions have been made on which assets are expendable, ones that could end on that list include motorcycle brand Ducati, the MAN Diesel & Turbo business and propulsion specialist MAN Renk, said the people.
An initial public offering of the trucks business, which includes the Scania and MAN units, could also be considered down the road, one of the people said.
“Commercial-vehicle demand is on the rise in Europe so their timing on a sale of the truck operations MAN and Scania might be well timed,” Richard Hilgert, a Chicago-based analyst with Morningstar, said in an e-mail.
“Ducati is a well-revered brand and could be worth a pretty penny.”
The expansion of Volkswagen into the broad range of product lines and brands it juggles today under one roof was the brainchild of Ferdinand Piech, the long-time CEO and later chairman of the company.
Piech left last year in a management dust-up with Martin Winterkorn, Mueller’s predecessor, who followed Piech out of the door shortly after the emissions scandal broke into the open. Mueller previously ran the Porsche sports-car subsidiary. — Bloomberg
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