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The long-awaited cooperation between Navistar and Volkswagen’s Truck & Bus division is now official.
The deal will see a $256 million equity investment in Navistar by the German OEM, and will not only allow for a joint procurement policy, but also facilitate a “strategic technology and supply collaboration", as Navistar put it.
"This alliance with Volkswagen Truck & Bus marks a significant milestone in our company's history, and we expect it will create multiple benefits for both companies in both the near and long term," said Troy Clarke, Chairman, President and CEO of Navistar.
Andreas Renschler, CEO of Volkswagen Truck & Bus, commented: "The authorities have given our strategic alliance with Navistar the green light.
“Our newly-founded purchasing cooperation will begin work immediately. This puts both partners in a stronger position for the future. The strategic alliance provides Volkswagen Truck & Bus with access to the all-important North American market. This is a major step toward becoming a global champion.”
Renschler said a joint procurement division named Global Truck & Bus Procurement has already been formed and will get to work immediately.
As part of the alliance, it is expected to create new opportunities for quality improvement and cost reduction, and will enable both companies to benefit from increased global scope and scale.
The joint venture is operating out of Navistar's headquarters in Lisle, Illinois, and comprises representatives from both companies who will be combining the demand of five brands – Volkswagen Truck & Bus's Scania, MAN and Volkswagen Caminhões e Ônibus, in addition to Navistar's own International and IC Bus brands.
The companies' ongoing technology and supply collaboration, which operates out of Stockholm, Sweden, is intended to facilitate collaboration on several aspects of commercial vehicle development, including advanced powertrain technology solutions.
Ultimately, it is expected to “optimise research and development spend” and expand the technology options both companies will be able to offer customers. Navistar continues to expect significant synergies from both the strategic technology collaboration and the procurement joint venture.
By year five, the alliance is expected to generate annual synergies of at least $200 million for Navistar, the company said.
As part of the deal and in line with Volkswagen Truck & Bus's ownership stake, Renschler and Matthias Gründler, Chief Financial Officer of Volkswagen Truck & Bus, are joining Navistar's board of directors.