Commercial truck builder Navistar said it has begun discussions with General Motors Corp. to acquire GM’s medium-duty truck business, including the rights to manufacture GMC and Chevrolet brand trucks.
According to a statement by Daniel Ustian, Navistar’s chairman, president and CEO, Navistar would sell a competitive line of Chevrolet and GMC medium trucks and service parts through GM’s proprietary dealer network in the U.S. and Canada, while helping Navistar advance its strategy to build scale and reduce costs.
“An agreement with GM could become an important part of our growth strategy as we leverage our core strengths in commercial trucks and engines,” Ustian said. “GM would entrust Navistar to support two of its most important brands because of the depth of our experience and success in the medium truck business.”
Analyst Chris Brady of Commercial Motor Vehicle Consulting told FleetOwner that this would be the first time Navistar – which builds commercial trucks and engines via its subsidiary International Truck & Engine Corp. – manages multiple truck brands.
“They need to keep the GMC and Chevrolet pricing in the current range, to retain the core customers in each of those brands,” he said. “They are a much more price-conscious segment that International’s customer base.”
While there are risks in having to move up from managing one to three different truck brands, there are some positives, Brady said. “First, they really expand their aftermarket parts coverage,” he said. “Second, if International can transfer some of the GMC and Chevrolet truck production to its plants, getting higher utilization and volumes and those lowering manufacturing costs, they can actually increase their margins without raising [truck] prices.”
It’s not clear how Navistar’s current deals with Ford Motor Co. could be affected if the GM acquisition occurs. International builds diesel engines for Ford’s Super Duty truck line and they share medium-duty cabover production at International’s Mexican truck plant.
“Ford really competes directly with GMC and Chevrolet, not International,” said Brady. “It’ll be interesting to see what happens there.”