Volkswagen’s new Traton attempts to ready itself for the new world of trucking

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The decision by Volkswagen AG to float its truck division off as a separate business says a lot about Volkswagen as a Group but also about the future of trucking and truck production.

Now renamed Traton, the company includes the MAN, SCANIA and Volkswagen Caminhoes Onibus brands.

A statement from Traton said that the flotation on the Frankfurt stock exchange is now scheduled for “before the summer break” having been postponed earlier in the year by what Volkswagen perceived as adverse market conditions.

The Volkswagen hopes to raise €1.9bn by selling 10% of the equity of the new company. This is less than the 25% it previously indicated that it would sell.

In part the move to create a separate truck manufacturer is motivated by Volkswagen Group’s wider problems. The company is struggling to re-orientate itself after the diesel emissions scandal whilst it also needs to focus on evolving new electric-powered and digital technologies for its passenger car business. This requires both capital and management resources. Already Volkswagen is rumoured to be experiencing considerable disagreement amongst its senior management on how to handle the transition to new technology.

However, the truck market is undergoing a shift in technology at least as great as that in passenger cars. In particular there are advanced projects by a variety of truck manufacturers to introduce digital guidance systems into commercial vehicles. In particular Volvo and Mercedes Benz Trucks already have some semi-autonomous features in their products. The new Traton company will need to concentrate its efforts in this area if it is not to fall behind.

Traton may have a strong position in Europe and in South America, however elsewhere in the world it has a weaker market presence. The strong implication is that the new independent company will be able to consider major acquisitions and mergers, especially in the US where it is rumoured to be considering expanding its equity holding in the truck maker Navistar.

It is worth noting that Traton does not appear to include the van business of Volkswagen, yet light commercial vehicles are one of the most dynamic areas for new technology, both for propulsion and guidance.

Purchasers of commercial vehicles need to brace themselves for a burst of change in the truck market as new companies appear, offering new technologies. As much as the passenger car sector, the supply-side of road freight is likely to be transformed over the next decade.

Source: Transport Intelligence, June 18, 2019

Author: Thomas Cullen