Together we are stronger

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Volkswagen Group Press Release  /  June 2017

With its strategic alliance with U.S. commercial vehicle manufacturer Navistar, Volkswagen Truck & Bus aims to take a big step forward on its way to becoming a Global Champion.

Navistar is one of the industry's giants in the United States, where it operates the industry's largest dealer network and has an annual turnover of 8.1 billion dollars. In Europe, however, its name is almost unknown. The opposite is true for Volkswagen Truck & Bus: The brands MAN, Scania and Volkswagen Commercial Vehicles are highly familiar names to Europeans, and have a long history. However, they are largely unknown in the U.S. except for industry specialists. What would happen if the two companies were to join forces in order to combine their respective strengths?

This is exactly what a business deal accomplished on March 1, 2017. Today, Volkswagen Truck & Bus and Navistar are partners. They have formed a strategic alliance from which both parties will benefit. For this purpose, Volkswagen Truck & Bus acquired a 16.6% stake in the U.S. manufacturer – an important step in implementing Volkswagen Truck & Bus’s Global Champion strategy.

This long-term investment was officially approved only a few months ago, yet initial results have already been achieved. The partners have set up a joint venture to explore joint purchasing opportunities, which is expected to save considerable amounts of money within three years.

But that is not all. "We are discussing projects that we could develop together," says Eric Tech. He is an American and one of the two managers who are responsible for the coordination and implementation of the alliance. Eric Tech comes from Navistar and nowadays works in Södertälje, Sweden. Located in the vicinity of Stockholm, this is also the home of Scania, one of the Volkswagen Truck & Bus brands. The alliance is domiciled in a different part of the city, however, on the top floor of an office building. Eric Tech believes firmly in this strategic alliance: "Before entering it, we looked at many possible partners. However, Volkswagen Truck & Bus was exactly the right one for us."

In 2016 alone, more than 200,000 heavy trucks were sold in the United States. To date, it has been a hindrance for Volkswagen Truck & Bus not to have a presence there. Creating a new organization for its brands, in turn, would have been too expensive. Navistar is very well positioned in the U.S. and Canada, with a market share of 16 percent in school buses and heavy trucks.

The company is also the largest manufacturer of the famous yellow school bus. Every day, millions of children in the U.S. are picked up with these buses from the farthest corners of this enormous country. The boxy yellow vehicles are a symbol of safety and reliability. "Here too we can envisage joint projects," adds Frederik Zohm. In the meantime, both parties have been working together on future technologies. This includes the mega trend of digitization, which eventually will lead to connecting whole truck fleets. In the future, the respective digital platforms will be coordinated in such a manner that the databases for both partners will be significantly expanded – which will help everyone. Similar effects are expected from cooperation in the areas of alternative motor fuels or autonomous driving. The potential is enormous, emphasizes Frederik Zohm: “As we speak, joint working groups are looking for projects. Fact is, they are coming up with more ideas than we can even realize."

While Volkswagen Truck & Bus drivetrains will be present on the U.S. market in the future, Navistar is not thinking of making an appearance in Europe. "We will remain in America,” says Eric Tech. Its goal at the moment is to rebuild its market share. With the help of its new partner Volkswagen Truck & Bus.

100 years of history

At Volkswagen Truck & Bus, the project is led by Frederik Zohm, who is enthusiastic about it: "We can become active in North America without first having to painstakingly build up our own brand," he states. After all, Navistar already has more than 100 years of history with the International Truck and IC Bus brands in the region.

An immense challenge

The company, however, is also facing an immense challenge. While it is well-known for the high quality of its vehicle bodies and operator cabs, there is a gap when it comes to drivetrain technology. A few years ago, this almost drove Navistar into ruin. At the time, the company had placed its bets on an alternative path for diesel emission aftertreatment, which ultimately did not work out technically. Its market share in the United States dropped as a result. Thus, Navistar is placing a new bet on the renowned drivetrains of Volkswagen Truck & Bus. The new A26 engine with 12.4 liter capacity will mark the beginning. It is based on an engine that has long been used successfully by MAN and that will be modified for the United States.

Components work together perfectly

"We will benefit from the ability to offer integrated drivetrains," is how Eric Tech explains this step. Until now, customers picked the engines and transmissions for their trucks from different suppliers. Navistar then built them into its own chassis. In contrast, there is the integrated truck, which has largely become the industry standard. All individual components work together perfectly since they have been developed for this specific purpose.

European expertise

In the future, Navistar trucks will be able to claim that their drive systems have been developed based on European expertise. "This has a nice ring to it in the United States, since Europeans are well-known for their quality," says Tech. This way, Volkswagen Truck & Bus will come closer to reaching its goal: becoming a Global Champion in the commercial vehicle segment. "To this end, we must grow and we need new customers - for example, in the United States," says Zohm. North America is, after all, one of the largest commercial vehicle markets in the world.

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[TeamsterGrrrl]

OK, when can I go to my friendly local International dealer and buy a Transporter TDI van?

[RoadwayR]

I think both VW and Daimler should think about spinning their truck operations off.  Volvo and Fiat have done this, and in both instances it helped the truck operations considerably.  Little or no 'synergy' between mass auto manufacturers and commercial truck manufacturers anymore.  

In VW's case, I think there is a very real threat that their car business will eventually damage the truck business.  

[BillyT]

Has nothing to do with business, but the Lonestar is my favorite of the high tech styled International tractors! Does it sell well?

[RoadwayR]

https://www.autoblog.com/2017/08/24/daimler-report-restructure-break-up-mercedes-divisions/