Earnings season moves on apace, but in addition to the conversations about the performance of truck sector component companies, there is increasing speculation about their ownership.
The creation of Fiat Industrial led to speculation that Fiat was looking to exit truck. Fiat Industrial saw most of its IP vested with Fiat Auto, and so one interpretation of the separation of Fiat’s car and commercial/con-ag businesses was that the latter were no longer of interest, and the former was where the action lay.
At last month’s AGM, Fiat Chief Executive Sergio Marchionne announced that the Iveco Daily would debut in North America in 2013. What he didn’t announce was the launch of any truck product.
Recent events have dampened such grand speculation, but have allowed for a more measured analysis. At last month’s AGM, Fiat Chief Executive Sergio Marchionne announced that the Iveco Daily would debut in North America in 2013. What he didn’t announce was the launch of any truck product. Fiat Industrial now sees Iveco as a split operation, producing Light and Heavy product. The cost of developing a US retail network for light commercial vehicles alone would be astronomical, and so Daily will presumably sell through Chrysler‘s Dodge network. Iveco’s value thus swings yet further away from Heavy and more towards Light and Medium. The Heavy business could appeal to an OEM with European, Latin American and, increasingly, Chinese aspirations.
AB Volvo is a trickier call to make. While the synergies between CE and truck are developing – witness the combined show of strength at last month’s Intermat Exhibition – Volvo is arguably far less diversified than Fiat Industrial, and so there doesn’t seem too much to trim from the core business, notwithstanding Volvo Aero. But Basel III may play a role here; the banking regulatory standard will impact a number of banks, one of which could be Handelsbanken, the major shareholder of Industrivärden, which, itself, lies second only to Renault SA in terms of ownership of AB Volvo. So the twin catalysts of Basel III and the recent French Presidential elections could both cause upheaval in Gothenburg.
Aabar’s likely exit from its role as anchor shareholder leaves Daimler with, once again, a large free float and, once again, a problem.
What about Stuttgart? Daimler has long consigned to the darkness anyone who would question the wisdom of the combined car and truck strategy, but there seems to be some concern in the air. Aabar’s likely exit from its role as anchor shareholder leaves Daimler with, once again, a large free float and, once again, a problem. According to Reuters, institutional investors held almost 67% and private investors another 20% of Daimler stock as of 6 February. Chief Financial Officer Bodo Uebber spent some of the most recent earnings call attempting to calm fears, but the reality is that Daimler’s combined car and truck strategy places it in a small minority, and one that would seem to offer some attractive potential for an activist financial investor minded to cleave the two asunder.
In 2008, the sky fell in. By 2012, the dust has settled, and we look out across a truck industry landscape that is populated by the same names facing the same issues. It’s no different this time, and this observation would seem to apply as much to ownership as it does to any other facet of the operation.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Oliver Dixon is Editor, World Truck Analysis.
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