VW thinking it doesn't own enough brands, looks at buying another

[Swallow Doretti]

Not sure if this would also include Lotus or not.

VW mulls renewed bid for Malaysia's Proton, sources say

BERLIN (Reuters) -- Volkswagen AG is considering launching a new bid for Malaysia's Proton as Europe's largest carmaker aims to tap growing southeast Asian markets in its quest for global dominance, sources familiar with the matter said on Thursday.

VW, which failed in 2007 to form a tie-up with Proton, might seek either a minority holding in the owner of UK sports-car manufacturer Lotus or a controlling stake, two sources said on condition they not be identified.

VW assembles the Passat sedan in partnership with Malaysian automotive and property conglomerate DRB-HICOM at the company's plant in Pekan. VW, which does not have a factory in Malaysia, also plans to produce the Jetta and Polo models at DRB-HICOM's factory.

"Toyota has declared the area as its own backyard," said Christoph Stuermer, a Frankfurt-based analyst at research firm IHS Automotive. "But southeast Asia plays a considerable role in VW's global expansion plan; they can't afford not to be there."

German publication Manager Magazin reported earlier on Thursday that VW was considering another bid for Proton, noting that its deliberations might even include a full-scale acquisition in the long term.

VW spokesman Eric Felber declined to comment on the report.

The German carmaker, which surpassed Toyota last year to become the world's second-biggest manufacturer behind General Motors, has a goal of boosting global deliveries to more than 10 million vehicles by 2018.

Six-month sales, including the group's Audi and Skoda brands, rose 9 percent to 4.45 million vehicles, putting VW on track to beat last year's record 8.3 million. Deliveries in the Asia-Pacific region surged 18 percent to 1.48 million cars, of which 1.3 million were sold in China, VW's biggest market.

Previous talks with VW foundered partly because of pressure from Malaysia's former Prime Minister Mahathir Mohamad, who, as Proton adviser, said that the company (which was then state-owned) must remain in Malaysian hands.

Malaysia's state investment arm Khazanah sold its 42.7 percent stake in Proton in January to DRB-HICOM for $411.9 million.

Underlining its push for world dominance, VW announced a major reshuffle of group and brand managers on June 2 to drive growth in emerging markets and accelerate a planned integration of its truck-making divisions.

"It's our clear goal to continue the successful (expansion)course of past years with great dynamics and stability," CEO Martin Winterkorn said on June 2.

[Aonarch]

Yawn. They just need to stop.

[DUBLUV401]

Pinky: So what do you want to do today Brain?

Brain: Same thing we do everyday Pinky, try to take over the world!!!!

EDIT: needs pictures

[FissionMailed]

Winterkorn: So what do you want to do today, Ferdinand?

Piech: Same thing we do everyday, Martin, try to take over the world!!!!

you messed up on the names

edit: technically I did too, I'm sorry, no character map on this computer, apparently

[Air and water do mix]

Pinky: So what do you want to do today Brain?

Brain: Same thing we do everyday Pinky, try to take over the world!!!!

Excellent.

They started with the tri-state area though, right?

[BetterByDesign]

I dont understand this mission to be the world largest manufacturer; and what's the point if you are doing it by just buying companies?

The only reason I can think of is a certain executives will be retiring soon and want to leave being able to say they did whatever they did. I've seen this happen before, but a few mis-steps and the whole spaceship can come crashing down.

[KahviVW]

Have they purchased Navstar and Alfa yet?

[feels_road]

I dont understand this mission to be the world largest manufacturer; and what's the point if you are doing it by just buying companies?

The only reason I can think of is a certain executives will be retiring soon and want to leave being able to say they did whatever they did. I've seen this happen before, but a few mis-steps and the whole spaceship can come crashing down.

Forget the "largest manufacturer" thing, even if that happens as a by-product.

The European car market is shrinking - both literally (many countries have a shrinking population) and in terms of the size of cars and engines, sold. Car manufacturers - if they want to survive - must invest in growing markets - such as Brazil, Russia, South and Southeast Asia, and China. Some countries are easier to enter than others, for numerous local reasons, so it can be easier to form a partnership than trying to build your own factories.

[MrRoboto]

If VW does own Proton, I wonder what will happen to Lotus...

[vwpiloto]

If it helps them to penetrate a market they would already be trying to enter or gain more market share in, then why not? It depends on how healthy Proton is.

It still amazes me though that all of this was "just" a $1B loan away from being Porsche's to deal with.

[deagle]

the intent is all well and good, but VAG seems incompetent on how to use business relationships

look how the suzuki deal went

[feels_road]

the intent is all well and good, but VAG seems incompetent on how to use business relationships

look how the suzuki deal went

You mean, like for example with Škoda, Audi, Lamborghini, or Bugatti? Or with MAN and Scania?

With Suzuki, there were clearly other things going on. And, VW still owns 20% of it, and Suzuki can do nothing about it.

[ironmule]

im actually surprised VW didn't grab up Saab at some point- maybe they knew it was a bad investment?

[feels_road]

im actually surprised VW didn't grab up Saab at some point- maybe they knew it was a bad investment?

In other words, did you read what you typed after you typed it?

[Big Dac With Fries]

Once they get established in Madagascar, it's game over for every other company.

[BetterByDesign]

Forget the "largest manufacturer" thing, even if that happens as a by-product.

The European car market is shrinking - both literally (many countries have a shrinking population) and in terms of the size of cars and engines, sold. Car manufacturers - if they want to survive - must invest in growing markets - such as Brazil, Russia, South and Southeast Asia, and China. Some countries are easier to enter than others, for numerous local reasons, so it can be easier to form a partnership than trying to build your own factories.

Good point thanks VW has always had a strong presense in Brazil and China, but Malaysia...why.

[2.0T_Convert]

If VW does own Proton, I wonder what will happen to Lotus...

A way to sell cheap sports cars and roadsters without diluting Porsche perhaps.

[genjy]

I dont understand this mission to be the world largest manufacturer; and what's the point if you are doing it by just buying companies?

So VW can buy large quantities of parts at cheaper prices and use those bulk parts in different brands, cutting down costs.

Just like what GM did.

[Ark6]

Look at the bright side, if this purschase actually happens, maybe lotus will help build GTIs that can actually handle, and Audis that won't oversteer.

[Excathedra]

You mean, like for example with Škoda, Audi, Lamborghini, or Bugatti? Or with MAN and Scania?

With Suzuki, there were clearly other things going on. And, VW still owns 20% of it, and Suzuki can do nothing about it.

MAN/Scania is perhaps not the best example for a successful merge. It is, first of all, not yet completed and has so far been rather turbulent as Scania simply do not want to be a part of MAN.

I found this comment rather telling.

[8V Fury]

I think it is a good move for vw.

[feels_road]

Good point thanks VW has always had a strong presense in Brazil and China, but Malaysia...why.

I think there are sufficient potential customers within reasonable shipping distance:

Country ....... population

Malaysia ....... 28 million
Indonesia ... 237 million
Thailand ....... 67 million
Philippines .... 92 million
Myanmar ...... 60 million

MAN/Scania is perhaps not the best example for a successful merge. It is, first of all, not yet completed and has so far been rather turbulent as Scania simply do not want to be a part of MAN.

I found this comment rather telling.

Published: 8 Dec 06

Lot's of things have changed, since. But yeah, no one expected this to be done overnight.

[MrRoboto]

A way to sell cheap sports cars and roadsters without diluting Porsche perhaps.

Lotuses aren't exactly cheap, really.

[patrikman]

A way to sell cheap sports cars and roadsters without diluting Porsche perhaps.

Lol Boxster.

[Swallow Doretti]

You mean, like for example with Škoda, Audi, Lamborghini, or Bugatti? Or with MAN and Scania?

Well, by most accounts, Bugatti loses money. More importantly, the SEAT purchase has never borne fruit for VW either. At some point, VW is going to have to face the very real issue that it will probably need to shutter the Spanish brand rather than allowing it to lose cash indefinitely.

As VW continues to buy other companies in other parts of the world, and does so at a rather rapid pace, it will be very challenging to quickly integrate these organizations into the VW structure successfully, lest it have a repeat of the Suzuki situation on a larger scale. If VW does buy Proton and Navistar, that means it will have four new brands (Lotus and Ducati, which it just recently acquired) to try and integrate all at once, and that's a big job. Doesn't mean it's not doable, but it certainly doesn't make it easy, and the failure rate on such an action is much higher than the success rate.

[MRVW00]

When did VW buy Navistar and Lotus?

[MrRoboto]

When did VW buy Navistar and Lotus?

Proton owns Lotus, DRB then bought Proton. Now if VW buys Proton, is Lotus part of the package? Or is it now a separate entity under DRB?

I reckon DRB will throw Lotus under the bus if they can't get VW to take them along with Proton. But if Lotus does go under the VW stable...

[Ark6]

Proton owns Lotus, DRB then bought Proton. Now if VW buys Proton, is Lotus part of the package? Or is it now a separate entity under DRB?

I reckon DRB will throw Lotus under the bus if they can't get VW to take them along with Proton. But if Lotus does go under the VW stable...

How many boutique automakers can VAG have? They already have Bugatti, Lambo, Bentley, and now Porsche (although they make a business case by themselves)

Lotus is a direct competitor to Porsche. Wonder how that will work out...Especially with them being tied up with Toyota (in terms of powerplants)

[atomicalex]

Once they get established in Madagascar, it's game over for every other company.

Please tell me I am not the only person who got this.....

Resisting opportunity to add a land war in Asia joke.... Although, VW has done quite well there, so maybe not a joke.

edit - regarding Lotus being a direct competitor to Porsche - I would disagree. A strong competitor, yes. But Porsche's model range is very broad, and Lotus' is not. Lotus makes little track cars that glorified go-karts (nothing wrong with this, I want one!), and Porsche makes cars that can be used on the track, along with supporting a racing program. Porsche includes a fully integrated design studio, also, along with in-house engine development. The rest of Proton is a modern-day AP version of SEAT.

Adding Proton to the mix would give VW more AP presence and if Lotus is involved, then they get a new type of sportscar to play with - one that has no pretense of being a luxury car. This would be somewhat new. And there do exist 1.8t Elises. I have seen one. It was the NeVar evAr LosE.

[CBJ]

In the future we will all eat at taco bell and drive a VW.

[Ark6]

It'd be nice to see the Evora with Audi's 3.0T instead of the 3.5 mill in there from Toyota. And they could always tweak it to rev higher, etc.


And I await the TDI Elise.

[NoDubJustYet]

While VW acquiring Lotus might not sound like the best idea to many of you... I think VWs money could be quite helpful. Lotus is a BIG mess right now - I can only see this possible acquisition as a good thing.

[MrRoboto]

While VW acquiring Lotus might not sound like the best idea to many of you... I think VWs money could be quite helpful. Lotus is a BIG mess right now - I can only see this possible acquisition as a good thing.

The problem is, VW is getting bigger now. Having enough talent to run all of their divisions is already a big ask. Poaching others isn't out of the question, but it is always hit and miss, unlike developing your own talent in-house.

Then there is the state of Lotus cars. They are loss making simply because Bahar has been too aggressive, and now they have too much on their hands. The original five model ranges have shrunk effectively to three, plus an average at best F1 campaign that has them bleeding from the jugular. So is it worthwhile for VW to throw their money at essentially bailing out Lotus out of their debt? What can they really get out of it? A few decent sports cars that don't make much money?

The Lotus brand value itself has plummeted in recent years too. Makes you think about the prospects, really...

[NoDubJustYet]

What do they get out of it?

Simple.

Automotive Industry Lebensraum...

[71camaro]

Look at the bright side, if this purschase actually happens, maybe lotus will help build GTIs that can actually handle, and Audis that won't oversteer.

Audis understeer.