Navistar International Corp. (NYSE: NAV) will sell mining trucks from Scania Group through a few dealerships in Canada in the first product-sharing deal with its global alliance partner TRATON Group.
The memorandum of understanding announced at the North American Commercial Vehicles Show in Atlanta on October 28 is significant because it opens the door to TRATON, the holding company for Volkswagen AG’s truck group, to sell products in North America.
Navistar kept exclusive access to the U.S. and Canadian markets when it agreed to sell 16.8% of the company to the former Volkswagen Truck Group for $256 million in 2016.
TRATON CEO Andreas Renschler said in July the company has no interest in a bigger equity stake in Navistar even as the alliance expands beyond purchasing and powertrain cooperation. Speculation continues that TRATON eventually will add Navistar to its brand stable as it challenges Daimler AG (NASDAQ: DDAIF) and Volvo AB (NASDAQ: VLVLY) for global truck dominance.
Navistar, which has gained several points of share in the U.S. market this year, is leveraging the global TRATON Alliance for more growth toward its Vision 2025 plan that includes a stretch goal of 25% market share compared to about 17% today.
Södertälje, Sweden-based Scania would import its XT off-road and mining trucks as soon as 2020. The XT competes with mining equipment made by Deerfield, Illinois-based Caterpillar Inc. (NYSE: CAT)
Scania would replicate its Field Workshop System, a modular concept that uses 20-foot ISO containers to create temporary on-site parts and service support facilities in remote mining locations. The containers hold parts inventory, maintenance shop equipment and office space. Frequently used parts are delivered to worksites and replenished regularly.
The Scania model, called a “total operating economy,” includes on-site vehicle maintenance by factory-trained service technicians typically found only at dealerships.
“Companies are exploring more sustainable solutions that improve worksite flexibility, increase uptime and reduce total operating costs,” said Navistar Chief Operating Officer Persio Lisboa.
Navistar, which counts about half its business in off-highway Class 4-8 vocational trucks, studied certain mining companies in Canada to see how its products could complement Scania’s. It is bringing its integrated International 360 service communications system and advanced remote diagnostic tools like OnCommand Connection to the arrangement.
“The most relevant customer solutions are generated by those who best understand the unique needs of each customer segment,” Lisboa said. “One of the biggest benefits (of the TRATON Alliance) is how we learn from each other.”
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