Scania's size big enough to go it alone: executive

An executive at Scania , object of an unsolicited bid from Germany's MAN, has rejected market speculation that Scania may be too small to remain independent and successful over the long term.

I'm convinced Scania can continue to grow organically, as we have done over the years, Hasse Johansson, head of research and development and group vice-president, told Reuters on the sidelines of the IAA commercial vehicles trade fair on Wednesday.

We have the knowledge and we have the resources to meet the technical challenges ... I'm convinced we will continue to develop in a positive way, I mean profitable growth.

In a meeting on Sunday, Scania's board unanimously rejected an unsolicited 9.6 billion euros ($12.2 billion) takeover offer from its German rival that would create the European truck market leader.

A day later, Scania's largest shareholder, Volkswagen, which owns 34 percent of the voting rights, said it would not accept the current bid on the table since it did not reflect VW's strategic interest.

An industry source familiar with the situation told Reuters on Wednesday that Volkswagen remained open to a deal in principle so long as it would retain significant influence in the emerging company.

MAN presented its cash-and-share bid as a chance for two mid-sized rivals to combine to form a continental powerhouse, with a platform for global growth that would give it the economies of scale to compete against bigger rivals.

Johansson defended Scania's size, however, as large enough to reap scale effects through, for example, its modular system used on five-, six- and eight-cylinder engines with output ranging from 230 to 620 horsepower.

We have the same combustion chamber, the same cylinder head, the same valve mechanism in each and every one of our engines, the Scania executive said.

(This) gives us an excellent scale economy, both in terms of R&D but also in manufacturing, because instead of talking about, let's say, 70,000 engines that we are manufacturing today, we said that we are making more than 400,000 cylinders every year. That's the kind of scale economy we have thanks to our modular system, he said.

Johansson also said Scania's plans to build gearboxes with MAN had all but fallen victim to the approach.

It's on ice ... it's really cold, he said.