In December 2007, Navistar announced that it had reached a tentative, non-binding agreement with General Motors to acquire its medium-duty truck business, including assets and intellectual property rights. The purchase will give Navistar the right to manufacture Class 4-8 GMC and Chevrolet brand vehicles and will include the related service parts business.
FleetOwner recently spoke to John Gaydash, marketing director for GM Fleet & Commercial Operations, about the pending deal.
FO: Why did GM decide to divest itself of the medium-duty business now?
Gaydash: The sale of our medium-duty truck business to Navistar allows GM to refocus on our core business. The medium-duty truck market is just so small in comparison with the huge volumes on the automotive side—millions of light-duty vehicles per year compared to thousands of trucks. We looked a long time for the right partner and we found it in Navistar.
FO: How did GM dealers respond to the news?
Gaydash: We recently crisscrossed the country with Navistar people to talk with many of our dealers in person about the pending sale. Our dealers walked into the meetings very concerned and walked out feeling they really had an opportunity to grow their businesses. This deal really does make sense.
While it is a purchase, not a joint venture, GM and Navistar will still have a relationship because GM will continue to control the business agreements with GM dealers. Additionally, there will be no changes to product branding or signage.
FO: What does this mean for GM’s agreement with Isuzu?
Gaydash: We still have about two more years to go in our agreement with Isuzu. That gives us time to make an orderly transition. It is my responsibility to make sure we do it right. After a while, you get a sixth sense for what is the right thing for your business, and this is the right thing.
FO: Is GM, like many other vehicle manufacturers, looking at hybrids and alternative fuel vehicles for the future?
Gaydash: Absolutely. More and more of our business and commercial customers are concerned about the environmental impact of the vehicles they drive and how that influences the reputation of their company. We displayed several fuel-saving vehicles at the Chicago Auto Show in February, for instance, including a Chevrolet HHR panel [van] that gets 30 highway miles per gallon; a Chevrolet Express 3500 cargo van with a 6.6 liter DuraMax engine that can run on B5 diesel; a half-ton Chevrolet Silverado that customers can power with E85 ethanol, gasoline or a combination of both fuels; and a 2009 model Chevrolet Silverado hybrid that provides all-electric driving at low speeds.
There are still a lot of unknowns about alternative fuels and hybrids, though, and there are a number of technologies out there now that are each maturing at their own rate. Today, there is no one “right” solution. Hybrids make great sense for some applications and not for others. We are manufacturing hybrid buses now, for instance, and that is a perfect hybrid application.
FO: Which solutions do you believe have the most potential to make a difference?
Gaydash: We think that E85 has a lot of potential to change the game. It is one of the easiest solutions to implement if you’re talking about displacing petroleum usage. We are also interested in biodiesel made from cellulose and have part ownership in a company that is developing cellulosic biodiesel.
FO: Are there things that could be done to speed the development and deployment of alternative power solutions?Gaydash: It is a very complicated issue and one that I’ve been personally involved with for a long time. Remember that General Motors did the first production compressed natural gas (CNG) vehicles back in the early 1980s. Today tax incentives, grants and other programs help, but there is no consistency across the country. As a manufacturer, we just can’t build vehicles to a variety of state- and even regional-level programs. We also need standards for the formulation of alternative fuels and an audit system of some sort to make sure everyone adheres to those standards.