Benefits are already being realized, says Navistar’s Troy Clarke (right).
HANNOVER, Germany – Navistar is already realizing the benefits of extra purchasing power made possible through a 17% equity stake secured by Volkswagen Truck and Bus – recently rebranded as Traton Group.
A related joint venture for procurement activities offered the business access to a bigger scale, Navistar president CEO Troy Clarke said during the IAA truck show in Germany. There have also been opportunities to licence technology and participate in related research and development.
A Traton-developed powertrain is in the works for use in Navistar trucks, and is expected in 2021.
“We were the first alliance partner of what is now Traton, and that was a multi-year journey,” said Clarke. “At the end of the day, [chief executive officer] Andreas Renschler and leadership at Traton said this is a company that has more good days ahead of it than bad days ahead of it.”
There were certainly some challenges, but Navistar is now enjoying black ink in its business ledgers.
The business has improved its EBITDA six years in a row, and is now making net income rather than recording losses. “It’s really been, financially, on a good path,” said executive vice-president and chief financial officer Walter Borst.
Through shared procurement the companies expect to save $500 million over five years, and realize a $200 million run rate by the fifth year.
“We’re on track to do this,” he said.
A Traton joint venture with Hino is also looking to secure savings in a similar way.
Traton has demonstrated further faith in Navistar by increasing its stake over the original 16.6%, buying shares on the open market and at rates higher than those paid when securing the first shares, Borst added. The deal involving the original equity stake closed in March 2017.
Navistar has also hinted at a new product to be launched in early November.