Volkswagen’s Traton eyes China push after $3.7 billion Navistar deal

  • With Navistar deal, Volkswagen aims to be a viable rival for industry leaders Daimler AG and Volvo AB on a global scale.
Traton makes Scania and MAN vehicles as well as VW-branded trucks for emerging markets and has been largely dependent on sales in Europe and Latin America. (REUTERS)
Traton makes Scania and MAN vehicles as well as VW-branded trucks for emerging markets and has been largely dependent on sales in Europe and Latin America.

Volkswagen AG’s Traton SE truck unit will seek to expand in Asia to further broaden its global presence, after finalizing the $3.7 billion takeover of US affiliate Navistar International Corp.

The company plans to fill remaining gaps in its industrial footprint in markets including China, Traton said Wednesday in a prepared statement for its annual general meeting.

“Chinese fleet customers are increasingly looking toward higher-end vehicles," Traton Chief Executive Officer Matthias Gruendler said. “They are expecting more and more in terms of efficiency and safety -- we want to meet this demand."

Also check these Vehicles

Find more Cars
Volkswagen Polo 2024 (HT Auto photo)
UPCOMING
Engine Icon999 cc FuelType IconPetrol
₹ 8 Lakhs
Alert Me When Launched
Volkswagen Tiguan 2025 (HT Auto photo)
UPCOMING
Engine Icon1984 cc FuelType IconPetrol
₹ 37 Lakhs
Alert Me When Launched
Volkswagen Taigun (HT Auto photo)
Engine Icon1498.0 cc FuelType IconPetrol
₹ 10.49 - 17.50 Lakhs
Compare
View Offers
Volkswagen Virtus (HT Auto photo)
Engine Icon999.0 cc FuelType IconPetrol
₹ 11.21 - 17.91 Lakh
Compare
View Offers
Volkswagen Tiguan (HT Auto photo)
Engine Icon1984.0 cc FuelType IconPetrol
₹ 32.79 Lakhs
Compare
View Offers
Volkswagen Id.7 (HT Auto photo)
UPCOMING
BatteryCapacity Icon77 kWh Range Icon621 Km
₹ 70 Lakhs
Alert Me When Launched

Acquiring Navistar marks a milestone for VW’s long-standing efforts to forge a viable rival for industry leaders Daimler AG and Volvo AB on a global scale. Traton makes Scania and MAN vehicles as well as VW-branded trucks for emerging markets and has been largely dependent on sales in Europe and Latin America.

Traton earlier agreed to pay $44.50 a share for the 83% of Navistar stock it doesn’t own, with parent VW providing a loan of 3.3 billion euros ($3.9 billion) to fund the transaction that is due to close July 1. VW is Navistar’s second-largest shareholder with a 16.7% stake, narrowly behind billionaire investor Carl Icahn.

Capital Raising

“We believe Traton equity story is at an inflection point with potential capital raise in the third quarter," Jefferies analyst Himanshu Agarwal said Friday in a note. To help finance the deal, Traton could raise as much as 1.5 billion euros by selling shares for 27 euros a piece, matching the price of its initial listing two years ago, he said.

Following the Navistar deal, Traton will “set its sights firmly on strengthening its capital structure," the company said Wednesday.

Even as analysts largely praised the move, Traton has in the past struggled to integrate industrial operations after taking full control. Rivalries marred cooperation between Scania and MAN for years, and Traton embarked on a deep restructuring at MAN after cost-sharing projects with Scania failed to stop a dramatic erosion in earnings.

While working on a bridgehead in the US - the truck industry’s biggest profit pool -- Traton has taken steps to build its presence in Asia. It cooperates with Toyota Motor Corp.’s truck subsidiary Hino on purchasing as well as battery-electric and fuel-cell trucks. Traton’s Swedish Scania brand announced in November it will build a wholly-owned production facility in China to make trucks starting early next year.

The factory will play an important role for the expansion plans in China, Traton said Wednesday. The site is also set to house research and development activities.

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.

First Published Date: 30 Jun 2021, 18:34 PM IST
NEXT ARTICLE BEGINS

Check Latest Offers

Please provide your details to get Personalized Offers

Choose city
+91 | Choose city
Choose city
Select a dealer

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy
Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.