Volkswagen Buys Stake in Navistar to Strengthen Truck Business

Volkswagen has moved to purchase a 16.6-percent stake in truck company Navistar for $256 million, reports Reuters. At a critical time for the automaker, the move should help VW gain access to the North American truck market and reduce development costs for its truck and bus division.

Navistar’s U.S. trucks will receive an adapted version of Volkswagen’s next-gen engines for MAN and Scania. Both VW and Navistar have agreed to collaborate on “many aspects” of future commercial truck development.

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

The automaker will pay $15.76 per share to acquire 16.2 million new Navistar shares. Volkswagen will also benefit from representation on Navistar’s board of directors.

According to Reuters, some analysts say the partnership could help Volkswagen gain more exposure in the North American market should it decide to go public with its truck business. It’s also a strategic move to tackle the sometimes-overwhelming demands of new emissions standards.

Like Volkswagen, Navistar has dealt with its own emissions woes. The U.S. firm’s heavy-duty diesel truck failed to receive approval from U.S. regulators back in 2010, and ever since then, it has been hoping to score a strategic partnership. Currently, Navistar is recording 84,000 annual sales, compared to Volkswagen’s 179,000 truck and bus sales.

Source: Reuters, Volkswagen AG

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