PARIS ― The idea of selling Renault Trucks Defense could be dead in the water, however some wonder whether a French Army competition for a light multirole reconnaissance vehicle could resurrect the move.
There’s a school of thought that the sale of RTD ― a subsidiary of Swedish truck-maker Volvo ― is simply postponed rather than canceled. And according to three defense executives, the tender for the Army vehicle, dubbed Light VBMR, is key to the future of RTD.
Winning a contract worth hundreds of millions of euros would boost the value of the company and bring back the sale of Volvo’s military business, Volvo Group Governmental Sales, the sources said.
“Light VBMR is a determining factor,” an executive said. RTD is the major part of the government sales unit.
That expectation of a sale clashes with remarks by Joël Barre, the head of France’s Direction Générale de l’Armement procurement office, or DGA, who said Oct. 18 that Volvo would not put the subsidiary back on the market.
“Concerning RTD, there will not be a sale,” Barre told the defense committee of the lower house National Assembly, an official record of the meeting showed.
Barre told legislators he had seen Jan Gurander the day before and asked the Volvo deputy CEO and chief financial officer whether there had been a cancellation or a postponement of a few months.
“He guaranteed that there is a definitive halt on a sale, assuring me that he would give RTD the resources to develop itself,” he said, adding that the DGA would keep a careful eye on these “verbal commitments.”
RTD chairman Emmanuel Larcher — who accompanied Gurander — backed up the remarks of the Volvo senior executive, Barre said.
‘They have to sell it‘
Industry executives, however, expect a sale of RTD, in part because the company is seen as a strong candidate in the competition for the Light VBMR.
There is a view that both the previous bidders, CMI and KNDS, had factored in RTD winning the Light VBMR contract in their valuations, a source said. So if that were the case, even if RTD were to win the deal, the prospective bids would not rise.
Volvo called off the sale of the VGGS division last month after a competition — which ran almost a year — failed to attract bids as high as the Swedish company and its bank adviser, Rothschild, expected.
According to the three executives who spoke to Defense News, among the bidders for the light vehicle contract are Engie Ineo, teamed with Austrian partner Achleitner; KNDS; RTD; Soframe; and Thales.
A selection in the tender for the light vehicle is expected by the end of the year or early next year, an executive said. The best and final offers have been handed in and are being assessed.
A DGA spokesman confirmed the competition has been launched and is underway. No further details were available.
One view is that by winning the light vehicle contract, RTD would boost prospective bids by €200 million to €300 million (U.S. $233 million to $349 million) in a renewed sale of VGGS.
RTD has a strong position as major supplier of light vehicles to the French Army, but there seems to be uncertainty over its future in the wake of Volvo’s attempt to sell the unit.
The Volvo governmental sales unit includes Acmat, Mack and Panhard alongside RTD.
“They have to sell it,” a source said. The core business of Volvo is commercial trucks, while VGGS accounts for only 1.5 percent of group sales.
In the tender for the light vehicle, Thales was expected to offer its Australian Bushmaster vehicle, which could be assembled under license in France with an industrial partner. The electronics company displayed a Bushmaster at the trade show Forum Entreprise Defense, held Oct. 18-19 at Versailles, just outside the capital, an executive said. Equipment service was the theme of the show.
RTD was expected to offer its Sherpa or Bastion vehicles, while KNDS could pitch a Krauss-Maffei Wegmann four-wheel drive vehicle, which equips German and Polish special forces.
The light multirole vehicle is part of the French Army’s Scorpion modernization program, with a first delivery due in 2021.
The Army expects an increased order of 558 light vehicles, compared to a previous target of 358 units, the service website shows. That revised number reflects the government’s 2016 decision to boost the strength of the Army in an anti-terrorist drive.
The DGA confirmed the higher order. A first batch of 400 units is due by 2025 under the first phase of Scorpion, with the balance of orders expected in the second phase.
The Army requirement is for a 10-ton, four-wheel drive vehicle to equip command, brigade, intelligence and electronic warfare units. The vehicle will be equipped with a standard information and command network, software-defined radio, and electronics, and it will be armed with a remote-controlled 12.7mm or 7.62mm machine gun.
The Light VBMR vehicle will replace the Véhicule Blindé Léger scout car.
Volvo said Oct. 17 the company would “discontinue” the sale of its government sales unit as offers had been too low, and that the group would continue with the operation.
CMI and KNDS had filed rival bids of about €400 million for VGGS, which Volvo and Rothschilds considered too low in view of expectations of offers of €500 million to €700 million.
CMI is a Belgian firm that build guns and turrets for armored vehicles. KNDS is a joint venture between Krauss-Maffei Wegmann and Nexter.