German auto giant Volkswagen said it had bought a 16.6-percent stake in American truck maker Navistar, giving it a foothold in the US market.
As well as the $256 million (229 million euros) investment, VW’s Truck and Bus division will also launch a “strategic technology and supply chain co-operation” and a purchasing joint venture with the US firm, the group said in a statement.
VW commercial vehicles chief Andreas Renschler hailed the move as a “major milestone on our way to create a global champion.”
The deal will also see VW Truck and Bus, which unites VW’s own-brand heavy vehicles as well as Scania and MAN, take two seats on Navistar’s board.
Set for completion in late 2016 or early 2017, the agreement means VW Truck and Bus “will gain access to the key North American market, where it was not previously represented,” the group said in a statement.
German rival Daimler currently dominates the US truck and bus market with its Freightliner brand.
But Volkswagen is hunting new opportunities as the effects of its drawn-out diesel emissions scandal linger in the minds of ordinary American consumers, weighing on car sales.
The deal was a “first step to improve the footprint of VW Truck and Bus in the US,” analysts at DZ Bank wrote, but “we assess the commercial vehicles business to be less important than VW’s car business.”
Citing an anonymous VW investor, the Financial Times reported that VW’s Navistar share acquisition could be the first step toward a flotation of its truck business in 2017.
Illinois-based Navistar itself in March paid a $7.5-million fine to the US Securities and Exchange Commission regulator after having lied about its engines’ conformity with emissions rules in the early 2010s.
In its own statement, Navistar said that the VW deal would create at least $500 million of synergies over the coming five years.
The US manufacturer has been in business since 1902 and builds trucks, coaches, construction equipment and engines for heavy vehicles, including military ones.
With around 17,000 employees, Navistar boasts annual revenues of around $10 billion — but has seen its share price founder by almost two-thirds over the past two years.

Source: Arab News