By on September 6, 2016

Navistar TransStar

Volkswagen’s commercial vehicles division is eager to enter the U.S. heavy truck market, and it just found a partner to help pull it off.

Volkswagen Truck & Bus has announced it will buy a 16.6 percent stake in U.S. truck maker Navistar International Corp., a share buy worth $256 million. Both companies hope to save money (and make more of it) through the technology-sharing deal, with joint products on the horizon.

The automaker’s MAN and Scania truck brands already have a solid presence in the European truck market, but the U.S. market is too tempting to pass up. Breaking into it isn’t easy (or cheap), so Volkswagen went looking for an alliance. Navistar hopes to reverse a sales and revenue slide through the partnership.

“Our collaboration, especially with regard to the powertrain, will considerably increase our synergy potential,” said Matthias Gründler, CFO of Volkswagen Truck & Bus, in a joint media release. “Navistar will be able to profit from excellent powertrain technologies and we, in turn, will benefit from significantly higher volumes. Initiating this strategic alliance now will enable us to implement the requirements of Navistar into our joint component platforms from the get-go.”

As part of the deal, Volkswagen Truck & Bus will fill two seats on Navistar’s board of directors. The deal, which includes a joint procurement venture, is expected to be finalized in late 2016 or early 2017.

Volkswagen’s truck division has borrowed a strategy from its passenger car division, which once sought global dominance (before the diesel emissions scandal threw a wrench into those plans). By entering new markets, the division wants to become a “worldwide leading commercial vehicles group in terms of profitability, innovations for its customers and global presence,” Volkswagen claims.

The automaker hopes to achieve this status within a decade. Making more money from its truck division is a key part of the automaker’s 2025 strategy.

“Starting in the near term, this alliance will benefit our purchasing operations through global scope and scale,” said Troy Clarke, President and CEO of Navistar, in a statement. “Over the longer term, it is intended to expand the technology options we are able to offer our customers by leveraging the best of both companies and enabling Navistar to deliver enhanced uptime.”

Clarke claims the deal will improve Navistar’s flagging fortunes.

[Image: Navistar]

Get the latest TTAC e-Newsletter!

Recommended

51 Comments on “Volkswagen Buys Stake in Navistar, Wants a Slice of the U.S. Heavy Truck Market...”


  • avatar
    statikboy

    ZOMG, first!?

    So Volkswagen is hoping to get help with their diesel emissions control compliance?

    • 0 avatar
      NoGoYo

      I was gonna say, hasn’t Navistar already gotten in enough emissions trouble on their own?

      • 0 avatar
        RobertRyan

        @statikboy,
        Thought I would find a comment like yours to this article. It is VW Corporation, that is helping fund Scania and MAN in the takeover of Navistar. Scania has worked with Cummins in creating new fuel injection systems, MAN designed an Engine for Navistar, that replaced their non compliant EPA models.
        Only “VW” in Scania and MAN is in their boardrooms. VW has full ownership of MAN and 85% of Scania

  • avatar
    seth1065

    well so much for VW will have no cash left for anything and will be going out of business.

  • avatar
    bullnuke

    Fairly big news here in West-Central Ohio. The local Navistar plant has had a long rocky existence for almost 100 years of truck manufacture. They recently began startup of a production line that has been idle for 15 years to produce cab and chassis vehicles in an agreement with GM. There is a lot of speculation as to what Volkswagen might bring to the area.

    • 0 avatar
      RobertRyan

      @bullnuke
      Considerable engineering input. Head of Scania who was interviewed , said he was very cashed up as a Company and was looking for acquisitions. This would be after the GM Decision by Navistar.

  • avatar
    SCE to AUX

    Now we know where all those confiscated TDIs will be going.

    Take that, EPA!

  • avatar
    zip94513

    After the Ford fiasco I wouldn’t touch a Navistar.

    • 0 avatar
      Hummer

      After the Ford fiasco I wouldn’t touch a Ford.

      FTFY

      Navistar didn’t tell Ford to crank the output up without modifications.

      • 0 avatar
        tresmonos

        Without knowing the specifics of the supplier contract, or having inside knowledge of the development of the program, what you just typed out is complete hyperbole.

        A full service supplier relationship would infer the exact opposite of your comment.

    • 0 avatar
      Scoutdude

      Fact is the Navistar rushed the VT series engines to market half baked. They saw the EPA dangling 2010 credits for selling 2007 compliant vehicles early. So they sent out the 6.0 w/o proper durability testing. Ford is not entirely off the hook because they wanted those credits too.

  • avatar
    RHD

    One sinking ship ties up to another sinking ship so that both can float…

    No disrespect intended to the fine folks at Navistar (nee International Harvester). Vehicle makers are merging and changing names like banks. There must be more money to be made in mergers and acquisitions than in running actual businesses.

    • 0 avatar
      everybodyhatesscott

      I used to be in a developmental program at Navistar. Every single person, except maybe one, I was in the program with jumped ship because that place is garbage. I did an interview with President of International Truck Group circa 2009 when they went with egr instead of SCR and asked him ‘what is the backup plan if EGR doesn’t work?’ There was no backup plan. A young finance/accounting graduate could see this was not the best idea. They edited that part out of the final interview.

      • 0 avatar
        RobertRyan

        @everybodyhatesscott
        Navistar is a total basket case. Scania and MAN are taking over Navistar( have not bought a controlling interest yet) as it gives them a recogniseable US Company, , distribution chainsand Conventional Cabs they do not have to design themselves.

    • 0 avatar
      RobertRyan

      @RHD,
      Dieselgate fiasco has not touched Scania and MAN., both going gangbusters in their global truck markets.

  • avatar
    indi500fan

    Navi nearly bellied up when they bet the farm on being able to do EPA 2010 without urea injection. If they had VW “technology” back then, they might have been able to pass those tests…

  • avatar
    Sjalabais

    So how big a market share does Navistar currently have? How have the other two European masters done inretrospect, namely Mercedes Benz with Freightliner and Volvo with White? Aren’t both US brand names on the way out in favour of their corporate parents?

    • 0 avatar
      NoGoYo

      White trucks haven’t been sold since the 1990s…

    • 0 avatar
      Scoutdude

      Daimler has owned the Freightliner and Western Star names for a number of years and show no signs of changing those names. They did put Mercedes power badges on Freightliner trucks but that was short lived. Volvo does sell a fair number of trucks with their own badge and I doubt they have plans to drop the Mack name with its storied history in this country. The saying is “as big as a Mack truck” and that still carries some weight in trucking circles.

      But yeah Navistar is in last place among the big 4 with Daimler controlling the market, followed by Paccar’s Kennys and Petes, Volvo’s namesake and Mack.

  • avatar
    Scoutdude

    This will not end well. While Navistar has been struggling they had seemed to have turned the corner and have had some profitable quarters. They certainly are still in the woods and money is tight but I just don’t see VW bringing anything to the table other than cash. And I just have to wonder where VW came up with the cash to throw around like that. It is not like they aren’t still deep in the woods with their own problems. Maybe VW is looking at how Navistar managed to negotiate with the EPA with less drama than they had themselves.

    • 0 avatar
      Kyree S. Williams

      Considering the tens of billions that have been allocated to the emissions scandal, $256 million is chump change.

    • 0 avatar
      Toad

      VW basically gained a North American truck brand, sales organization, hundreds of dealers, and a parts network for under $300 million. That sounds like a very good deal. Navistar is the only independent domestic truck maker left and they are not in good shape; VW’s cash, engineering resources, and worldwide truck footprint is probably needed to keep Navistar alive.

      Navistar has lost about half it’s market share in the last few years and without some outside help the slide might continue. Plus Carl Ichan has been a major shareholder for a couple of years now and is no fool; he would not have signed off on the VW investment if it was not needed.

      • 0 avatar
        EquipmentJunkie

        I agree with Toad. VW knows that they would need a totally clean sheet design of products in North America. Cabovers won’t cut it here. Too many North Americans with a chrome and “large car” mentality. The Swedes attempted to market European trucks with Scania back in the early-90s and it didn’t work. Partnering with Navistar is the best way for VW to get their foot in the door in North America. Navistar needs a trouble-free powerplant and MAN engines fit the bill. The masses aren’t totally aware of how bad it got for Navistar in recent years…they still think that Navistar has its old market share.

        The next question is: Who will buy Iveco from Fiat?

      • 0 avatar
        RobertRyan

        @EquipmentJunkie
        Very cheap solution for Scania and MAN. Basically MAN engines,, maybe Scania for other applications.
        IVECO , Case and John Holland are now powering Fiat/ Chrysler. The first three are in a separate company from Fiat and Chrysler

    • 0 avatar
      Sjalabais

      Why shouldn’t VW’s truck tech, sufficient on at least three continents, be worth to bring to the able in NA? Serious question, not a poke.

      • 0 avatar
        RobertRyan

        @Sjalabais
        It will be but it is nor ” VW” it is Scania and MAN that are very separate but owned or partly owned by VW

      • 0 avatar
        EquipmentJunkie

        The Class 8 truck market in the States is as polarized and brand-loyal as our pickup truck market. Think about how successful Nissan and Toyota have been at breaking into the US full-sized pickup market. They have sold trucks but the market share numbers are very low. Another parallel would be to look at UD and Hino. Both are two, medium-duty Japanese truck brands that have had a steep hill to climb as well…and they have been trying to tackle our market for 20+ years.

        European and US emission standards are different for the engines. So, that complicates things greatly.

        Heavy truck markets are very different in the EU. (Cab-over-engine cabs totally dominate Europe due to maneuverability benefits and packaging advantages where space is at a premium…here in the States you can hardly give a cab-over away. Europe uses a lot more single drive axles. Also, distances traveled tend to be shorter in Europe.) As a result, very few EU trucks are brought to North America. Why? They just are a poor fit for our market. Mercedes and Volvo were wise enough to recognize that purchasing a product line (Freightliner for Merc and Mack for Volvo) delivers:
        – the product
        – an in-place dealer network already generating sales
        – parts and service infrastructure
        – brand names
        This made entry into the North American market much more economical. The alternative is a lot of money and time to get things in place. Cat just gave up on their Class 8 truck effort after a relatively simple agreement with Navistar…that was five years after beginning with a rock-solid brand name and dealer network but not in the truck market.

        To answer your question about those European designs, yes, they could be brought here and tweaked for our market. However, it is grossly expensive for a relatively small per-unit market. Trying to adapt European designs for the States is extremely risky from a marketing perspective, too. For instance, Volvo walked that line very closely over the years. It can be argued that many stick-in-the-mud Class 8 truck drivers still have not embraced Volvo’s brand here in the States…too “weird-looking”.

        • 0 avatar
          RobertRyan

          @EquipmentJunkie
          Conventional Trucks are primarily seen in NA. you also get mixed CabOver/ Conventionals in Australia , New Zealand and South Africa. MAN and Scania have considerable truck operations Globally.
          Scania who seem the most keen out of the MAN/ Scania combo to get into the US Market were weighing up whether PACCAR or Navistar as US partners and eventual takeover targets,
          .MAN owns the VW Truck franchise in South America., VW CabOver Heavy Trucks with Cummins engines are only sold in South America.
          Increasing vertical integration with MAN, Scania and now Navistar, will put Cummins and Eatons noses out of joint in the US
          Head of VW Truck Bus, that includes MAN, Scania and VW Heavy Trucks, used to head Daimlers(Mercedes) Truck Division

          • 0 avatar
            EquipmentJunkie

            RobertRyan,
            I agree on the cab configurations in AU, NZ, and South African markets. I just wanted to keep the discussion simpler for Sjalabais.

            Paccar seems to manage DAF pretty well in Europe. I don’t know past or present market share numbers, though. I find it interesting that Paccar seems to have been updating/broadening their cab offerings Stateside in recent years. The days of the heavy-duty aluminum cabs of yesterday might be numbered.

            There is no doubt in my mind that this Navistar-VW agreement will cause hand-wringing in various boardrooms across the world.

          • 0 avatar
            RobertRyan

            @EquipmentJunkie
            Hand wringing for Cummins especially as it now appears, MAN, has dropped Cummins from it’s engine lineup for it’s VW branded South American Trucks.
            Access to the NA Market will dramatically put Scania/MAN on roughly the same footing as Mercedes and Volvo.
            What is missing is an Asian Truck asset.
            Mercedes has Fuso ,only the Canter sold in the US
            Volvo has UD Trucks
            In the US only the light delivery trucks of both manufacturers are sold
            Prior to the GFC.Scania and MAN were on track to sell more Class 8’s globally, than are sold in all of NA
            Much handwringing indeed

        • 0 avatar
          Sjalabais

          A most excellent reply! It is sometimes hard to understand how conservative that market is. I see the image Jalopnik just used to illustrate the same news; all chrome and inefficiencies wherever the eye looks. Shouldn’t this market feel the pinch of economics? If someone can offer a reliable, efficient, cheap truck, how can that not be acceptable?

          Another comparison could be those massive delivery vans etc like Ford E series that have received established competition by the MB Sprinter sold as a Dodge. And the Sprinter isn’t even good; the Hiace was and the Transit is in both their own ways.

  • avatar
    dal20402

    So, worst diesel engine builder in the passenger vehicle world ties up with worst diesel engine builder in the heavy truck world.

    These days, I don’t know why any heavy truck or bus buyer bothers with anything that isn’t a Cummins. They’ve really taken a lead and everyone else is struggling to catch up.

    • 0 avatar

      The volvo engines aren’t bad but really based on some recent experience with some CAT gensets. I’m back to mostly being a Cummins fan. They seem to screw up much less then the other guys.

    • 0 avatar
      Toad

      Detroit Diesel probably has the best engine reputation in the commercial truck market right now; the DD 13/15/16 has lots of fans among fleet owners and drivers. Very durable, great fuel economy. BUT you can only get it in Freightliner trucks; Daimler owns both Detroit Diesel and Freightliner and have made it a proprietary engine for Freightliner trucks only. The strength of that engine is one reason Freightliner has over 40% share of the commercial truck market.

      You can get Cummins engines in Freightliner trucks but the take rate for them is under 5%.

      • 0 avatar

        Good to know. I work in the portable power gen and marine markets here I see mostly CAT and Cummins, plus a variety of others depending on specific industries or location.

      • 0 avatar
        Numbers_Matching

        The low take rate for the Cummins option maybe because they are limited to being the natural gas option (Cummins-Westport) for the Freightliner line. All diesel options are now ‘DD’ series for class 8.

        • 0 avatar
          Toad

          They are not limited to natural gas; your can get the full line of Cummins diesel engines across the entire Freightliner medium and heavy duty lineup. 95% of customers simply choose not to do so.

          FWIW most truck makers proprietary engines have not held up well at all, so Cummins is often the best option. Freightliner’s Detroit Diesel has been the exception to that rule.

          • 0 avatar
            Sjalabais

            But that’s only true for NA, isn’t it? How come the commercial engine business is so dominated by few engine suppliers?

      • 0 avatar
        dal20402

        True; they made a nice recovery from the Series 50 debacle.

        For those who haven’t had the misfortune of using one, they took the Series 60 — a nice engine, but too heavy and thirsty for short-haul and transit bus applications — and just cut off two cylinders without any other major changes. The resulting big four was a vibration nightmare and literally shook vehicle bodies apart. The transit agency I worked for had to retire a bunch of Series 50 buses before the expected end of life because of chronic body cracking — and these buses were predominantly used on the freeway, not in the central city service that’s typically most abusive. They endured a ton of litigation over it, retreated into only the heaviest end of the market, and lost some good money for Daimler (which bought them right at the peak of Series 50 sales).

      • 0 avatar
        Lex

        “You can get Cummins engines in Freightliner trucks but the take rate for them is under 5%”

        Take this with a grain of salt. With the downturn last year, DTNA’s goal was to max out capacity on their DD-run Freightliners. It was a very deliberate effort, with an aggressive pricing strategy on the new DD15, paired with the new transmissions in the Cascadia. Tough to beat out this combination when you are a component supplier without eating into margins. Your text imples that this is a demand issue which is not entirely that simple

    • 0 avatar
      Scoutdude

      Fact is that Navistar does offer Cummins engines. In some trucks and buses Cummins is the only diesel engine choice. As part of their emissions debacle they chose to go that way to quickly get SCR equipped trucks on the road.

    • 0 avatar
      RobertRyan

      @dal20402
      Nothing to with VW Diesels but Scania and MAN Diesels

  • avatar
    Jeff S

    Detroit Allison is still making diesel engines and still has a good image.

  • avatar
    APaGttH

    Ve hav a zolution to our diesel engine problem.

    Da engineers hav configured zis I-24 from six recalled engines da Americans are making us buy back, for uze in da truck configuration.

    Za engine uzes these chains that are impossibly zycronized in dis configuration, to combine za power of all six motors. Engine maintenance being near impossible, and very expenzive – vee expect enthusiasts to buy zees and insist to others, “zey are not all zat bad to work on.”

    However, because zis is in a truck, vee don’t have to worry about emissions.

    [EVIL LAUGHTER]

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Lie2me: Those Commanders were awful. I was going to trade my Grand Cherokee in on one until I took it for a test...
  • dantes_inferno: FCA’s motto: Dodge testing. RAM into production.
  • teddyc73: Why? Because people like them. Or should I say….Because “people” like “them”....
  • teddyc73: I’m sure some people would dispute those claims.
  • Jarred Fitzgerald: Well, that’s China for you, always with the “imitation game.” Though I have to...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber