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VW makes $9.2B offer for rest of truckmaker Scania

Volkswagen owns or has controlling interests in three commercial truck operations: besides its own, VW began buying shares in Sweden's Scania in 2000 and now controls 89.2 percent of its shares and 62.6 percent of its capital, then bought into Germany's Man in 2006 - in order to prevent Man from trying to take over Scania - and now owns 75 percent of it. The car company has managed to work out 200 million euros in savings, but believes it can unlock a total of 650 million euros in savings if it takes outright control of Scania and can spread more common parts among the three divisions.
It has proposed a 6.7-billion-euro ($9.2 billion) buyout, but according to a Bloomberg report, Scania's minority investors don't appear inclined to the deal. Although effectively controlled by VW, Scania is an independently-listed Swedish company, and a profitable one at that: in the January-September 2013 period its operating profit was 9.4 percent compared to Man's 0.4 percent. Some of the other shareholders believe that Scania is better off on its own and will not approve the deal, some have asked an auditor to look into the potential conflict of interest between VW and Man, while some are willing to examine the deal and "make an evaluation based on what a long-term owner finds is good," which might not be just "the stock market price plus a few percent." The buyout will only be official assuming VW can reach the 90-percent share threshold that Swedish law mandates for a squeeze-out.
Many of the arguments against boil down to investors believing that Scania's Swedishness and unique offerings are what keep it profitable, and ownership by the German car company will kill that. (Have we heard that somewhere before?) If Volkswagen can buy that additional 0.8-percent share in Scania, perhaps its buyout wrangling with Man will give it an idea of what it's in for: "dozens" of minority investors in the German truckmaker have filed cases against VW, seeking higher prices for their shares. It is likely only to delay the inevitable, though. If VW is really going to compete with Daimler and Volvo in the truck market, it has to get the size, clout and savings to do so.

Chrysler and Fiat offering $1,000 rebates to VW owners as Marchionne gets tough

The throw-down between Fiat CEO Sergio Marchionne and Volkswagen has heated up in earnest. According to Bloomberg, Fiat and Chrysler are now offering current Volkswagen owners in the US $1,000 rebates to trade in their ride. It's the latest in a series of shots Marchionne has taken at his German rival. As you may recall, the Fiat executive entered into a spat with Volkwagen board chairman Ferdinand Piëch and CEO Martin Winterkorn in October after the duo called for Marchionne's resignation from presidency of the European Automotive Manufacturers Association (AECA). At the time, the Volkswagen executives were quoted as saying Fiat would not survive the European economic downturn.
In response, Marchionne called the German executives "reprehensible," and accused Volkswagen of using a pricing strategy that has created created a "bloodbath" in the EU. Volkswagen has taken to steep discounting to carve out ever-larger slices of market share in Europe, but the company has a much smaller foothold in the US. Marchionne may be trying to hit Volkswagen where the manufacturer is weakest with the new Fiat new incentive program.
Late last week, the Fiat executive was voted to a second term as ACEA president.

VW and partner SAIC start building $2.5B Audi plant in China

BEIJING — Volkswagen AG's China joint venture with SAIC Motor Corp has started building a $2.5 billion new energy vehicle (NEV) plant in Shanghai, which will make VW's luxury Audi brand cars, a possible first for the venture. The new plant is a key step for Audi to diversify production of its cars in the world's largest car market from its long-standing local partner, China FAW Group Corp. This shift has been delayed amid resistance from local dealers. SAIC Volkswagen said the new plant would have an annual capacity to make 300,000 cars and begin production from 2020. Audi sold 481,387 vehicles in China from January to September this year. The announcement comes the same week Tesla secured a Shanghai location for a Gigafactory battery plant to serve the Chinese market. Audi unveiled the plan to bolster ties with SAIC in late 2016. Earlier this year, the Germany luxury carmaker bought a 1 percent stake in the SAIC Volkswagen venture, paving the way for the joint venture to produce and sell Audi cars. Volkswagen currently gets a larger proportion of the proceeds from the 50-50 tie-up with SAIC than from its 40 percent stake in the venture with FAW. SAIC Volkswagen said in a statement on Friday the plant would cost 17 billion yuan ($2.5 billion) and would make VW and Skoda models as well as Audi cars. It will help VW tap China's fast-growing market for NEVs, a category comprising electric battery cars and plug-in electric hybrid vehicles. ($1 = 6.9314 Chinese yuan renminbi) Reporting by Yilei Sun and Adam JourdanRelated Video: Image Credit: Reuters Green Plants/Manufacturing Audi Volkswagen Skoda Electric Hybrid