Daimler Plans to Extend Partnership with Volkswagen
Current event
Issue:
Daimler is looking to extend their partnership with Volkswagen (VW) to allow them to produce the Crafter Van in Daimler's plant in Germany.
Overview:
Currently VW is producing 40,000 Crafter Vans annually out of the Duesseldorf plant in Germany, which is owned by Daimler. (Taylor) The Crafter Van shares a platform with the Dodge Sprinter van and the Mercedes version of the Sprinter. Their contract will expire in 2016 and there is talks that Volkswagen may not be renewing the contract due to their recent purchase of the majority stake in MAN SE.
MAN SE is a 253 year old company that specializes in commerical vehicles, engines, as well as mechanical engineering equipment. Headquartered in Munich, Germany, the company was taken over by Volkswagen on November 3, 2011 when the transaction was approved of VW’s 56% ownership stake in the company. (www.man.eu) This was good news for MAN SE because now they can utilize the vast resources of Volkswagen AG to help make them a much better company. MAN SE will retain their logo, name, and all of their plants. There are talks of integrating MAN SE with Volkswagen’s Swedish truck brand, Scania. (Savin)
In Volkswagen’s attempt to be the leader in the automotive world, the commercial vehicle market may be their weakness. With this new acquisition they hope that they can capitalize on the success MAN SE, and become dominant in that market. Already, Volkswagen has seen a 9% rise in sales in 2012, and they are planning on expanding their line of light weight commercial vehicles to capitalize on their success. (Savin)
Anticipated outcome:
I don’t believe that there is a reason for Volkswagen to continue the partnership with Daimler. Even though the Crafter van is a success in Europe, the acquisition of MAN SE allows them to produce their own version of the van’s successor. I can see the Crafter van being produced until the contract runs out in 2016, while Volkswagen and MAN SE develop the next line of light weight commerical trucks that will surely take over Europe.
Managerial implications:
It would benefit Daimler to keep the partnership with Volkswagen as long as they can. Volkswagen is a household name in Europe, and their share of the commerical truck market is only going to grow in the coming years.
Volkswagen is in the driver’s seat in this negotiation, now having purchased a commercial truck company it no longer needs Daimler’s production plant.
Resources
I think taking over MAN SE is great opportunity for Volkswagen to expand its position as one of the world’s leading transport- related engineering enterprise. MAN SE has a leading position not only in commercial vehicle and heavy trucks, but also in large diesel ship engines and stationary engines. However, Volkswagen is not good in these fields. By acquisition, Volkswagen can grow rapidly in these new fields and new location because it can share techniques, customers, venders and other resources with MAN SE. Trough structural and operational advantages by acquisition, the combined business can cut costs, increase profits and boost shareholder values. Together, they will create one of the world’s leading suppliers of commercial vehicles.
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