International acquires GM Medium-Duty business

International acquires GM Medium-Duty business

After months of rumors, International Truck and Engine Corp. has officially announced it is buying General Motors’ medium-duty truck business

GM North America President Troy Clarke (left) and Daniel C. Ustian, chairman, president and CEO Navistar International announce agreement to sell GM medium-duty truck business.

After months of rumors, International Truck and Engine Corp. has officially announced it is buying General Motors’ medium-duty truck business. Under a non-binding memorandum of understanding signed today, International will take over complete responsibility for manufacturing, engineering, sales, distribution, servicing, and marketing of GM’s TopKick, Kodiak and T-Series trucks.

The companies declined to comment on any of the financial terms.

The GM trucks will continue to be sold by the GMC and Chevrolet dealership networks, according to both parties. The related service parts business is also included in the sale. The deal does not impact GM’s current relationship with Isuzu for the Class 2 through 5 W-Series cabover trucks.

Expected to close sometime later this year, the transfer “should be seamless for both our customers and dealers,” according to John Gaydash, director of marketing, GM fleet & commercial operations.

Production of the C-4500 to C-8500 and T-Series trucks will move from GM’s Flint plant to a International facility yet to be named, with GM retaining ownership of the Flint facility.

“We have plans to transition the business to an International plant, but we are not ready to announce the plant,” said Dave Tarrant, manager of medium-duty commercial truck strategy for International. He added that the company does have locations in mind for the move, and expect to make the transition before the end of the 2008 calendar year.

GM also builds full-sized pickups at the Flint plant and will move other product production to the facility after the transition, Gaydash said during a telephone press conference. He added that GM’s medium-duty engineers and marketing teams would be redeployed to new assignments within the company, most likely in light-duty.

Currently Isuzu also supplies GM with its Duramax 6.6L diesel engine, which is used in both its pickup and medium truck products. That relationship will continue after the sale is finalized, according to GM.

However, International is a major manufacturer of competing diesel engines, and industry observers expect the medium-duty GM brands to eventually move over to International powerplants, especially as new technology becomes required to meet future emissions requirements.

“After the transition, the trucks will be built exactly as they’re build now, but we expect to refine them over time,” said Tarrant. “The decisions are ours, because the bottom line is ours,” he said, adding that International would continue to solicit input from General Motors.

According to data from Ward’s Auto, General Motors sold 23,953 Class 4-7 vehicles in the U.S. in first 11 months of 2007, while International sold 38,004. Overall U.S. retail sales for Class 4-7 for that period totaled 275,882 units.

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