Reuters (Frankfurt) - Volkswagen (VOWG_p.DE) still aims for closer ties between its truckmaking subsidiaries MAN of Germany and Sweden's Scania, the companies said on Friday, denying a report that highlighted a lack of progress and said the plan had been dropped.
Analysts said VW's plans for the two firms it controls were indeed going slowly, and the slow pace of progress suggested a full merger that could give the German vehicles group a stronger position in the global truck market was probably some way down the line.
VW has said it sees substantial synergies between 55.9 percent-owned MAN (MANG.DE) and Scania (SCVb.ST), in which it holds 70 percent, as it seeks to take on global market leader Daimler (DAIGn.DE) and world number two Volvo. (VOLVb.ST)
"Our plans remain unchanged," a VW spokesman said. A MAN official also said cooperation talks were continuing.
On Thursday, Swedish paper Dagens Industri reported unnamed sources as saying VW chairman Ferdinand Piech was now no longer pushing for closer cooperation as long as Scania continued to be the highly profitable business it is.
A spokesman for Scania said working groups between Scania and VW on areas of cooperation were still going on. "We don't really recognize what was reported in the newspaper," Scania spokesman Hans-Ake Danielsson said, referring to the report.
"We have had working groups with VW since last year looking into possible areas of cooperaton... These talks are on their way and they are going on in a constructive and positive way," he added.
The four areas of cooperation being looked at were axles, gearboxes, commodity purchasing and joint research on hybrid components for heavy trucks and buses.
SLOW PACE
He said any merger of the companies was up to Volkswagen.
"Now we are looking at possible cooperation. One thing at a time ...," he said.
Scania and MAN said in November 2011 that they were investigating a possible combination of their business to realize in full the synergies they see as possible. But little fresh has happened since then.
"Given their quiet, in combination with what they have said they want to achieve, which is 200 million euros in savings, this can only lead one to note that they plan to do very little with each other initially," said Handelsbanken analyst Hampus Engellau.
Another analyst, who declined to be named, agreed.
"When you work in groups to find synergies you are in close contact, but it still feels like a structural transaction is pretty far off," the analyst said.
This meant that for the time being Scania should be seen as a standalone company, even if there is industrial cooperation.
Scania, with its main markets in Europe and Latin America, including Brazil, has one of the highest profitability levels in the business, with operating profit as a percentage of sales coming in at 15 percent for the first nine months of 2011.
Volvo's truck business, which has a strong North American presence, had a profit margin of 9.3 percent and MAN abut 9.0 percent in the same period.
At the same time, Scania has begun to see signs of a downturn in demand and has cut production levels.
Daimler late last year said it expects to see a global sales increase in 2012 though the general economic situation was creating uncertainties for the truck business in Europe.
VW took its 70 percent stake in Scania in 2008, about two years after Scania fought off a hostile takeover by MAN.
Relations between Scania and MAN, frosty after the failed takeover, have been warming up under VW's control.
