Volkswagen Said to be Interested in Navistar Stake
Following recent management changes in its heavy truck group, Volkswagen may be aiming to expand its presence in the U.S. market. The easiest way to do that is to buy an existing player and according to Reuters, VW has its eye on troubled truckmaker Navistar International. Such an acquisition would give the German giant a way to better compete against rival Daimler, which owns Freightliner.
A number of obstacles could stand in Volkswagen’s way if it moves ahead with an acquisition of a stake in Navistar, however. Investor Carl Icahn has pushed Navistar to merge with commercial truck builder Oshkosh in 2011 and 2012 while higher-than-expected warranty claims on engines in manufactured in 2010 and 2011 have battered its stock price. Though that low share price makes Navistar an attractive takeover target, it also makes it tarnished brand that would need to improve its reputation for quality and reliability.
Volkswagen already owns truckmakers Scania and MAN, but due to differences in regulations and regional preferences, there are few synergies between European and North American heavy trucks. Most European heavy trucks employ a cabover design, which fell out of favor in North America following a regulatory change in 1976, allowing over-the-road trucks to have a maximum length of up to 75 feet.