VW’s MAN to Become Leaner as Parent Weighs Split, Truck IPO

Volkswagen Truck Unit’s Finance Chief Leaves Before Possible IPO
Truck cabins pass along a quality check line inside the MAN SE factory, operated by Volkswagen AG, in Munich, Germany, on May 16. (Matthias Doering/Bloomberg News)

MAN SE will take steps to become more profitable as owner Volkswagen AG prepares to split the 260- year-old German industrial conglomerate and potentially sell a stake in its commercial vehicles division to outside investors.

Volkswagen AG’s truck and bus division also is losing its finance chief only weeks after kick-starting work toward a potential share or bond sale.

The maker of trucks, buses and large diesel engines — controlled by VW since 2011 — said at a shareholders’ meeting May 16 it is aiming to cut vehicle development and material costs to become more efficient. After the split, MAN assets such as the units that make ship engines and transmissions might be reorganized or potentially sold.

RELATED: VW board to consider truck IPO, other sweeping changes

VW’s planned review will be conducted “with the necessary care,” Joachim Drees CEO of MAN, said, adding the group had achieved its targets for 2017. “We think this performance is encouraging, although profitability is still not satisfactory.”

MAN reported operating return on sales of 3.9 % for 2017, nearly double from a year ago. It warned margins might decline slightly this year amid a softening global economy.

Demand for transportation tends to mirror economic swings closely.

Volkswagen, as part of its own major overhaul, already has folded MAN’s truck and bus manufacturing business into a new division with Swedish sister brand Scania. Under VW’s new CEO, Herbert Diess, the world’s biggest carmaker is mulling the future of noncore assets outside its main passenger-car brands such as Audi and Porsche. The review comes amid the seismic shift toward electric vehicles and new digital services including ride hailing.

Krisztian Bocsi/Bloomberg News 


The looming changes reach deep into the structure of MAN.

VW truck chief and MAN Chairman Andreas Renschler last month signaled an organizational breakup when he said the MAN Diesel & Turbo SE unit, which produces ship engines, and its 76% holding in transmissions maker Renk AG will shift to parent Volkswagen.

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Drees on May 16 avoided giving detailed answers to shareholder questions about the possible divestment of the divisions. He read a prepared statement, saying there “might be deliberations about this theme” by parent VW but “no concrete plans” within MAN itself. Commenting on a possible outcome of VW’s deliberations would be speculation, he said.

The timing for a resolution of a legal dispute with MAN’s minority shareholders that stems from its takeover remains unclear, according to VW Chief Financial Officer Frank Witter.

While the issue won’t prevent a potential trucks IPO, it’s complicating matters somewhat, he said in April. VW controls a 75.73 % stake in MAN through its wholly owned trucks subsidiary.

Matthias Gruendler, chief financial officer of Volkswagen AG’s Truck & Bus division, is leaving the job for personal reasons, the VW unit said in an e-mail response to questions. “We very much regret this step, but we fully respect his decision,” the company said.

The departure comes at a delicate time for Andreas Renschler, head of VW Truck & Bus. An experienced and well-connected CFO is critical for a successful initial public offering or debt sale that the unit is preparing to help fund a global expansion.

Gruendler belonged to a group of top executives Renschler lured from his previous employer, Daimler AG, the global truck-market leader, to forge a legitimate rival. Gruendler became CFO of the unit in September 2015 after holding the same position at Daimler for about three years.

He was involved in all of the unit’s major deals since decision-making largely was decoupled from VW’s passenger-car operations three years ago. Those included the acquisition of an almost 17% stake in U.S. truckmaker Navistar International Corp. and the forging of an alliance with Japan’s Hino Motors Ltd., which is controlled by Toyota Motor Corp.

Last month, Gruendler said the VW unit may consider boosting its stake in Lisle, Ill.-based Navistar and said a takeover “would theoretically be possible.”


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