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VW's Scania truck alliance in focus as board meets: sources

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[February 18, 2014]  By Andreas Cremer and Jan Schwartz

BERLIN (Reuters) — Volkswagen <VOWG_p.DE> will focus later this week on its long-standing ambition to become Europe's biggest truck manufacturer which could set the stage for the hiring of ex-Daimler executive Andreas Renschler, sources familiar with the matter said.

Wolfsburg-based VW has spent billions of euros over the past decade on expanding stakes in Sweden's Scania <SCVb.ST> and Germany's MAN <MANG.DE> to reap cost savings and take on Daimler <DAIGn.DE>, the world's biggest truck maker.

But the full benefits from its alliance with Scania and MAN that VW Chairman Ferdinand Piech once pegged at about 1 billion euros ($1.37 billion) have yet to materialize.

The group's supervisory board will focus on VW's eight-year effort to create Europe's top manufacturer of heavy-duty commercial vehicles when it meets on Friday to sign off on 2013 earnings, two sources told Reuters on condition they not be named because the matter is confidential.


VW's 20-member supervisory board will discuss ways to promote cooperation among truck makers, the sources said without being more specific. VW declined to comment.

Europe's biggest automotive group is struggling to replicate its successful multi-brand management of passenger-car marquees such as luxury flagship Audi and Czech division Skoda in its truck operations, the success of which is important for its goal of becoming world market leader by 2018.

"VW can't be satisfied with the state of the trucks alliance and will want to raise its clout at Scania," Marc-Rene Tonn, analyst with Hamburg-based M.M. Warburg, said.

The German manufacturer is aiming to save about 200 million euros of truck-making costs this year by pooling purchases of materials such as tires, steel and glass. Over time, the goal is to jointly develop components, engines and platforms.

But VW's management in Wolfsburg is growing frustrated with lack of progress under the 68-year-old trucks chief Leif Oestling, sources said, whose contract at VW expires in 2015.

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To speed up the cooperation with its own commercial-vehicle division, VW wants to hire Renschler, ex-chief of Daimler Trucks who unexpectedly resigned last month as head of production at the Mercedes-Benz luxury division.

But Daimler boss Dieter Zetsche has said Renschler would not be able to join a rival soon because of a non-compete clause in his contract.

VW, which already owns 62.6 percent of Scania's equity and 89.2 percent of the votes, is also considering whether buying the remaining shares is necessary to increase control over the Swedish company, Wall Street Journal said on February 4, citing financial sources.

VW's truck, buses and van units combined have 35 billion euros of commercial vehicles sales and Daimler has commercial vehicles sales of about 44 billion, ISI Global analysts said.

In its 2013 results due on Friday, VW is forecast to report a 15-percent gain in fourth-quarter operating profit to 3.08 billion euros, according to a Reuters poll, benefiting from record sales at the Audi and Porsche premium divisions and declining costs of installing a new modular production platform.


($1 = 0.7307 euros)

(Reporting by Andreas Cremer; editing by Jane Merriman)

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