Volkswagen Buys Stake in Navistar, Wants a Slice of the U.S. Heavy Truck Market

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]