Navistar International being eyed by Volkswagen & Fiat group

Navistar International is a struggling Amercian truck maker, which also happens to have a joint venture with Indian conglomerate, Mahindra, to build heavy commercial vehicles for the Indian truck market. Navistar has been posting losses for a while now due to expensive warranty issues and this means that the truck makes is now on the sale block. German automaker Volkswagen and Italian automaker Fiat are said to be the two groups mulling separate bids for Navistar International as this would give the brands a foothold in the American commercial vehicle market.

A Mahindra Navistar Truck used as an illustration

The Volkswagen group already has two commercial vehicle brands under its belt, in the form of Scania and MAN. However, the US market is something that these brands haven’t cracked. Hence, Volkswagen’s bid for Navistar International might be one that will give the German group access to Amercica’s trucking market. Now, if Volkswagen does take over Navistar International’s business, we wonder what would be the status of the Mahindra-Navistar Jjoint venture, that the two firms signed way back in 2007. Ever since, Mahindra has introduced a slew of heavy commercial vehicles in India under the Mahindra-Navistar brand.

A Mahindra Navistar Truck used as an illustration

A potential conflict of interest has our interest piqued as Volkswagen has both MAN as well as Scania operating in India. In the next few years, both MAN as well as Scania are poised to enter the trailer segment of the truck business, which would mean that they could directly compete with Mahindra-Navistar. So, if that happens, it would be interesting to see how the Mahindra-Navistar alliance manages to cope with these changes. That said, this isn’t the first time such a tight spot has been created by automakers in India and the last incident too involved Mahindra, however in the role of a takeover agent.

A Mahindra Navistar Truck used as an illustration

A few years ago, Mahindra took over Reva Electric, which had an partnership with General Motors to develop electric variants of the latter’s small cars. Subsequent to Mahindra taking over Reva, the Reva-General Motors partnership folded. So, a similar story could unravel in the coming months if  Volkswagen takes over Navistar International. For now though, reports suggest that Volkswagen is still in the initial stages of examining whether Navistar would be a good fir in the group’s overall portfolio, which has a wide interest in the automptive industry, from superbikes to trucks; from super cars to family cars. Watch this space.