No Plans to Acquire Navistar, Volkswagen Officials Say

This story appears in the Sept. 24 print edition of Transport Topics.

HANOVER, Germany — The new truck-making powerhouse in Europe headed by Volkswagen AG is unlikely to make a play to acquire U.S.-based Navistar International Corp., according to interviews with company officials and others.

Volkswagen, one of the world’s largest car and commercial vehicle manufacturers, has controlling interests in two major truck makers — Germany-based MAN AG and Sweden-based Scania Group — and a MAN executive recently said the company had set overtaking Daimler AG as the world’s largest commercial vehicle maker as a corporate goal.

But neither MAN nor Scania sells trucks in North America, which has led to speculation that the new combination might be interested in acquiring Navistar to round out its global reach.

VW is “not involved in any talks about” acquiring Navistar, said Anders Nielsen, the new heavy truck chief at MAN. He moved to MAN from Scania after VW took control.

Nielsen said the company was planning to work on harmonizing the three truck units and “growing organically.”

VW owns controlling interests in MAN and Scania but does not own all of their stock.

Navistar, Lisle, Ill., has been going through turbulent times, with its longtime leader, Daniel Ustian, retiring in late August after the failure of the company’s heavy-duty engine program to produce engines that meet current U.S. emissions regulations (9-3, p. 1).

Multiple investor groups have taken large positions in Navistar stock during the recent turmoil, and in response, the company’s board adopted a so-called poison pill plan to prevent a takeover before Ustian resigned.

There has been much speculation about what might become of Navistar, which has been the second-largest heavy-duty brand in North America after Daimler for several years. The company is now moving to add emissions-compliant engines to its ProStar trucks.

Nielsen’s comments responded to a question after his presentation at a press conference during the International Motor Show here on Sept. 18. He has been at the helm of MAN for only a few weeks.

Nielsen said MAN does not “have any specific plans at the moment in North America,” citing differences in emissions and design regulations between Europe and North America. For instance, all three of the VW companies make only cabover model heavy-duty trucks that are the rule in Europe but not in North America.

While VW is not a major player in heavy-duty trucks globally, it does have a significant presence in the van and smaller commercial vehicle markets. MAN has been the market leader in Brazil for nine years and had a 31% market share last year, company officials said.

A source close to Nielsen confirmed that he is likely to focus his attentions on improving MAN’s existing operations and its presence in emerging markets, such as India and China.

Nielsen created a stir in Germany recently when he told a newspaper, “As a group, we have the potential to challenge Daimler for the No. 1 position” in the world.

MAN, Nielsen said then, has drafted a plan to overtake Daimler as the leading commercial vehicle maker by 2020, and Volvo AB, which is now No. 2.

VW is also currently embarked on what it has said is the goal of displacing U.S.-based General Motors as the largest passenger carmaker in the world by 2018. VW has been expanding its presence in the United States and now assembles some passenger vehicles there.

A spokesman for the new head of VW’s truck operations, Leif Östling, said the official would not have any comment about future plans for North America for now, preferring to let the leaders of the brands speak on the topic.

Östling, who also came over from Scania, now heads VW’s truck operations, which have combined annual sales of more than $40 billion, according to recent company reports.

Nielsen’s earlier comments got a rise out of Andreas Renschler, the head of Daimler Trucks and Buses.

“To catch up with Daimler on a global level, MAN and Scania still have to do some homework — for example, building a presence in North America and expanding operations in India and China,” Renschler told the Wall Street Journal.

“The latest comments from our competitor are raising the attentiveness of our own team.” he added.

The two German companies are longtime rivals; MAN is based in Munich, and Daimler in Stuttgart.

Daimler has had a closer relationship with VW, which is based in Wolfsburg, Germany. The company still makes VW’s Crafter high-profile vans at the same plant where Daimler produces most of its Sprinter models, although that agreement will expire in a few years.

There has been much press coverage of the VW roll-up of the two competitors and much speculation on how closely the truck makers will work together.

Several analysts have said the company is likely to try to utilize some modular production techniques employed by Scania that, according to Reuters, have made it the most profitable truck maker in the region.

Scania had a profit margin equal to about 15% of its sales revenue, well above Volvo’s 9.3% and MAN’s 9%, according to data from Reuters.