CCJ

October 2016

Fleet Management News & Business Info | Commercial Carrier Journal

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6 commercial carrier journal | october 2016 Truck OEMs at the altar Volkswagen's investment in Navistar gives European OEM foot in the door to North American market BY JEFF CRISSEY E ven though there are only a handful of players, the OEM truck business in North America is a complex market. All major parties, save one, have relationships or ownership in countries that provide a global presence – Volvo and Mack, Daimler with Freightliner and Western Star, and Paccar with DAF. Navistar had been the only contender in the North Ameri- can market without true international ties, and Volkswagen was a major European player without a stake in North Amer- ica. That all changed with the announcement last month that the German truck and bus maker had secured a 16.6 percent stake in Navistar. Top brass from the two companies sat down with the North American press at IAA 2016 in Hannover, Germany, for a roundtable discussion of the new partnership and what it means for both companies as well as Navistar's existing North American fleet customers and dealers. "We are looking forward to a successful alliance," said Andreas Renschler, chief executive officer of Volkswagen Truck & Bus. "Navistar needs what we can offer drivetrain- wise – including engine, transmission and axle. [Volkswa- gen] is at the moment developing new product lines, and we can put all the requirements from Navistar into that development." Dialogue between Navistar and Volkswagen – which also operates the MAN and Scania business units in Europe and abroad – began a year ago on opportunities to synergize and strengthen each company, culminating in Volkswagen's recent investment. "You see a lot of change [in the trucking industry], and we are excited to have found a partner that looks at the future the way we do and with whom we have a high degree of alignment," said Troy Clarke, CEO of Navistar. "We have a common vision on how the industry will develop and how to address those issues. That we can do it better together makes it a perfect fit." With its investment, Volkswagen now has an equal stake with Navistar's two largest existing shareholders, accord- ing to Navistar Chief Financial Officer Walter Borst. "We'll be able to explore advanced technologies, and for Navistar to do that on our own would be cost-pro- hibitive." The timing of Volkswagen's investment couldn't be better for Navistar, a company that is climbing back from the ill- fated decision to pursue exhaust gas recirculation technology to meet the U.S. Environmental Protection Agency's 2010 emissions standards when the rest of the industry ultimately went with a selective catalytic reduction solution. "Unfortunately, we turned left, and they went right," Clarke said. "We have done a lot to repair ourselves and make us a good partner but also are a good standalone company. Our business is operating as well as it has in a long time. This [partnership] doesn't solve all the prob- lems our company has, but it creates opportunities we didn't have a few weeks ago." Clarke said reaction from both large fleets and Navis- tar's dealer network has been extremely positive following the announcement, but added that customers shouldn't look for a new engine solution in the next few years. "We are going to look at where the industry will be 10 to 15 years from now and work back from that point," said Clarke, who added the two companies will look for immediate op- portunities to create working processes on new projects. Renschler then pegged 2021 as a realistic target date for Volkswagen to deliver an engine solution specifically tailored to the needs of Navistar's existing customer base, but stressed the companies would share technologies to strengthen both brands as opposed to Volkswagen simply supplying a pow- ertrain solution to Navistar customers. In other words, look for Volkswagen's fingerprints on International trucks sooner rather than later. "As a group, we have potential because we can use compo- nents from each other and go into [emerging] markets," said Renschler. "No one regional player alone can do that. We have a mission to bring transport to the next level and will move from being a hardware manufacturer to focus on transport efficiency. New drivetrain technology is one thing, but to en- able our customers to be more profitable and more efficient, that is our goal." UPFRONT JEFF CRISSEY is Editor of Commercial Carrier Journal. E-mail jcrissey@ccjmagazine.com.

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