Navistar Backs Out of GM Deal

Frank Williams
by Frank Williams
navistar backs out of gm deal

GM's reported " done deal" to sell their medium-duty truck line to Navistar has fallen through. In a tersely worded press release – reprinted here in its entirety – GM stated:

Due to significant marketplace and economic changes, GM and Navistar have decided not to renew the memorandum of understanding to purchase GM's medium duty truck business, which has expired. GM will continue to run the medium duty business as it has in the past, including providing sales, service and marketing support to GM dealers for its medium duty trucks.

GM will continue to review strategic options for the business, including continued discussions with Navistar.

So what impact this will have on GM's finances, since you know they'd already counted this as part of the " as much as $17 billion" cash they were going to use to get them through the next year? Do they drop the price low enough to entice Navistar into buying? Or do they try to sell to someone like Mahindra and Mahindra? OR do they stay in the medium truck business and just lay off a bunch of workers like they have elsewhere and cut production to match sales? No matter what the final resolution, it won't be good for GM.

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4 of 14 comments
  • NulloModo NulloModo on Aug 20, 2008

    While I am not familiar with the quality of GMs current medium duty trucks, it may have been a blessing in disguise for the customers to keep Navistar out of it. The Navistar influence is responsible for a lot of the problems with the 6.0 liter Ford diesel.

  • Menno Menno on Aug 20, 2008

    Hi Powerglide, yeah, that McDermott is a piece of work, isn't he? But then, many (most?) of the Washington DC crew are. Just remember that everything you say (whether or not you think anyone is listening) can be used against you by 'them who's in power'. For that matter, everything we type, too. That's okay. One day, these elitists won't know what to do and will run off and leave the ashes of a civilization to the rest of us. Perhaps we can then pick up where the founding fathers left off and rebuild.

  • Monkeyboy Monkeyboy on Aug 21, 2008

    It's good for GM that that they backed out. Two words: International Harvester. For those not too familiar with Medium Duty Trucks. They only use names like Rockwell, Borg Warner and Caterpillar, and Cummins and Allison. Not AAM. and Delphi.

  • Capeplates Capeplates on Aug 22, 2008

    Why pay premium prices when you can wait for the bankrupt sales to come on line - Navistar made a wise decision!