With a need to get itself back into shape, Europe's largest car manufacturer is selling off its restructuring operations and subsidiaries. But potential buyers don't seem to be interested.
Troubled VW is trying to slim down
Volkswagen, Europe's biggest carmaker, is having difficulty persuading a buyer to take over its car-leasing subsidiary Europcar, Financial Times Deutschland reported on Monday, quoting company sources.
VW, in the middle of restructuring, said in September that it was reviewing "all options, ranging from strategic expansion to an initial public offering (IPO) or sale, with regard to the wholly-owned subsidiaries Gedas and Europcar."
A number of potential buyers have been found for the IT services unit Gedas -- notably Deutsche Telekom's T-Systems and US information technology specialists ACS and EDS.
But the situation was looking more complicated for Europcar, with rivals Sixt and Budget both ruling out a takeover, sources told the newspaper.
Less interesting than Hertz
Thus, the only buyers would probably be financial investors. But since Europcar is not active on the US market, it is less interesting than, say, Hertz, which was recently sold by US auto giant Ford to private equity groups.
Furthermore, there was growing resistance within VW to the proposed sale of Europcar.
Volkswagen manager Peter Hartz resigned amid scandals this year
Paris-based Europcar, Europe's car rental group, has annual sales of 1.2 billion euros ($1.4 billion), a fleet of 220,000 cars and nearly 5,000 employees. Gedas had annual sales of 567 million euros last year and employed a workforce of 4,900.
Overall review of operations
The decision to review the future of the two companies was part of an overall review of all of VW's activities in the face of scandals and financial troubles at home. The company said it would also embark on an ambitious cost-cutting program to revive its struggling China operations at its two joint ventures.
Company officials said VW would take a variety of measures, such as centralized purchasing, for the two joint ventures and improve cross-venture cooperation between its partners Shanghai Automotive Industry Corp (SAIC) and First Automotive Works.
VW will still roll out new models
Volkswagen is expected to report disappointing results this year due to eroding margins caused by high material costs, increased competition and a continuing price war.
Nevertheless, the company said it was committed to introducing 10 to 12 new models before 2009 to the Chinese market -- the world's third largest -- that would better cater to local needs.