Despite a resounding negative press due to recalls, particulate matter and animal experiments, no other stock has outperformed the gains of Volkswagen over the last three months. Apparently, the management has recently done a few things right. This certainly includes entry to the American truck manufacturer Navistar International.
After the VW group after a long struggle, the two proud truck brands MAN and Scania got under one roof, there was still a big white mark on the world map: the US market. Already in 2014 there were rumors that the VW Truck & Bus division was interested in taking on the similarly sized PACCAR. Nothing came of it. Instead, an alliance was announced two years later with the great local rivals Navistar International.
On the one hand, this involves raising synergies in purchasing, sales and development. On the other hand, VW has also taken money into the hand, to strengthen Navistar’s back and to bind closer to itself. For $ 256 million, the Wolfsburg received about one-sixth of the shares. The stock had passed through a deep valley at the time and since then it is almost only uphill. Consequently, the balance sheet for 2017, presented on March 13, 2018, will be underpaid with an additional half a billion dollars, which will only be somewhat clouded by the euro’s strength.
The reasons for the boom
Also with PACCAR it runs quite round. Excellent figures have just been presented, with a highlight being a 42% increase in truck sales in North America. However, this has already been anticipated by investors and many of them have opted for the stock market rule “sell on good news”.
The fact that the US truck market is so strong is partly due to the fact that the need for renewal of the sometimes badly obsolete fleets has become urgent and, secondly, to the general optimism about the economy. Freight rates have already increased over the last few months, making the transport business worthwhile again. The high order volume in the last quarter gives reason to hope for good business, at least for the current financial year.
How it continues now
That’s a lot of tailwind for the still-young alliance. In the meantime, it has also been specified which joint projects one wants to tackle. These include, for example, the announced in early 2020 electric truck. “We will have more electrified trucks on the roads than Tesla,” announced Navistar chief Troy Clarke a few weeks ago, although the planned medium-heavy model is only partially comparable to Tesla’s Semi .
The joint development of a global, cross-brand vehicle networking platform is considered particularly important. Only if this succeeds will you be able to be on an equal footing with the industry leaders Daimler and Volvo AB. Troy Clarke sees his company in the interplay with the Swedish-German partners even on the number 1, as far as the number of future networked trucks.
It is quite possible that VW Commercial Vehicles, which returned to the US market in 2016, will also cooperate with the Navistar brand after the Crafter vans have been running under the MAN TGE label for some time . In the extensive product portfolio of currently focused on heavier vehicles Americans would fit well.
I think it pays to not only always look at the market share of the cars in the confusing Volkswagen Group, but also to keep an eye on the less well-regarded divisions such as MAN Diesel & Turbo and VW Truck & Bus. From there almost only good news.