Plans are progressing well for MAN and Volkswagen to merge their commercial vehicle businesses in South Africa, says MAN Truck & Bus South Africa CEO Thomas Hemmerich.

“We are busy integrating and merging both networks through the formation of several working groups targeting specific areas of business in South Africa and Africa.”

The new, bigger company will operate under the name MAN Truck & Bus South Africa.

The integration process follows after MAN SE, MAN Truck & Bus South Africa’s Germany-based parent, took over fellow German company Volkswagen AG’s heavy and extra-heavy truck and bus operation, in Brazil, in December.

Hemmerich explains that the merger comes as the result of an attempt to grow MAN’s international footprint as fast as possible.

“MAN offers a premium product in terms of technical specifications and price. We needed the tools to grow; we needed products aimed at other markets, such as emerging markets, to achieve the substantial growth we are aiming for.

“Through the merger, we got the opportunuity to grow our market share substantially in South America. The merger also provides MAN with access to products ideally suited to the African and Asian Pacific markets.”

Hemmerich says MAN previously had a weakness in the budget segment of the truck market.

But what will the merger mean for South African customers?

Hemmerich explains that the move will see both Volkswagen and MAN truck brands continue alongside each other, with dealers selling both product lines.

He also promises that there will no job losses as a result of the merger.

However, Hemmerich says the merger does mean Volkswagen of South Africa’s (VWSA’s) commercial vehicle assembly line in Uitenhage, in the Eastern Cape, will close, with all produc- tion moving to MAN’s Pinetown plant, in Kwazulu-Natal.

“Current planning indicates that we’ll start production of the first Volkswagen units at the Pinetown plant around October or November.”

The 15 South African Volkswagen commercial vehicle dealers have a choice whether they want to become part of a new MAN/VWSA dealer network, or whether they want to morph into VWSA passenger car, and light and medium commercial-vehicle dealers.

These truck dealers will be dual-branded.

“We insist on only having dealers in our network who specialise in vehicles heavier than 5 t,” notes Hemmerich.

He adds that MAN has had positive feedback from the majority of the VWSA commercial vehicle dealer network, with around five dealers likely to apply to become dual-branded MAN/VWSA franchisees.

“Those dealers who remain with VWSA may return their stock and parts to VWSA with no negative effect,” says Hemmerich.

He adds that the new combined dealer network will be stronger than before, with MAN having 32 dealers in South Africa, as well as dealers in Namibia and Botswana. These businesses outside Souht Africa will also become dual-branded dealers.

VWSA has commercial vehicle dealers in Namibia, Botswana, Kenya and Mozambique. These will also have the choice to apply for a dual-branded commercial vehicle identity, or to become Volkswagen passenger car, and light and medium heavy commercial- vehicle dealers.

All Volkswagen commercial vehicle liabilities and warranties become the responsibility of MAN.

Volkswagen was a late entrant into the commercial vehicle race in South Africa, with sales only starting around two years ago. It currently has a vehicle parc of around 350 trucks in South Africa, and 200 buses in Mozambique.

Hemmerich says the merging of the local companies’ IT systems will probably be the biggest challenge, and that both systems will have to run parallel for around 18 to 24 months before a new homogenous system can be established.

As for the product pipeline, Hemmerich says the two German parent companies are currently thrashing out the details of a new global joint product portfolio for trucks and buses.

“The good news is that there is almost no product overlap.”

Hemmerich says the new merged company will now start questioning its research and development projects in order to harmonise them, and avoid overlapping.

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