Volkswagen is reportedly mulling a takeover of Navistar
BI Intelligence
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Volkswagen AG's commercial vehicle unit, Volkswagen Truck & Bus, is reportedly considering buying out Navistar International, one of the largest truck manufacturers in the US, according to The Wall Street Journal.
This news comes after Volkswagen Truck & Bus already bought a 16.9% stake in Navistar and announced plans to bring a fully electric, medium-duty truck to market next year with the truckmaker. This potential move by VW could help the firm build scale and compete with its rivals, which are also expanding their trucking segments.
A buyout of Navistar would likely be part Volkswagen Truck & Bus' Global Champion strategy to use global expansion, strategic partners, and innovation to become a leader in the commercial transportation space. Volkswagen Truck & Bus is already considered a market leader in its core markets — its brands have a market share of 35% in Germany, 40% in Brazil, and nearly one-third in all of Europe.
However, Volkswagen doesn’t have a truck presence in North America.
As part of its expansion efforts, Volkswagen Truck & Bus will likely leverage Navistar's position on the continent — Navistar has a large dealer footprint in North America, and most of its sales come from the US, Canada, and Mexico — to strengthen its global position.
Expansion into North America will enable Volkswagen Truck & Bus to better compete with its rivals, which already have a presence in the region.
Daimler Trucks North America, a subsidiary of Mercedes-Benz parent company Daimler, had nearly 40% of the market for heavy-duty trucks in the region in 2017, according to Trucks.com. And, to meet better demand in North America, Daimler plans to increase production of its trucks in 2018.
Volvo AB, the Swedish manufacturing company, also made a splash in the region after acquiring America's oldest trucking company, Mack Trucks, in 2000. If VW wants to capture a significant share of a strong trucking market, which is growing as a result of freight demand pushing motor carriers to purchase more trucks, the firm will have to act quickly.
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