Volkswagen to supply engines in exchange for Navistar stake

Volkswagon

Volkswagen’s trucks division is close to announcing a partnership with U.S.-based rival Navistar International Corp.

Volkswagen has agreed to supply engines to Navistar in exchange for a stake in the truckmaker, one of the sources, who declined to be named, told Reuters. The deal will be announced as soon as Tuesday, the sources said. Volkswagen declined to comment, while Navistar was not immediately available for comment.

The financial burden of developing next generation engines to meet new emissions standards is forcing several carmakers to pursue partnerships and technology deals.

In May, Nissan took a 34 % stake in Mitsubishi Motors; while in 2013, Aston Martin agreed to sell a 5 percent stake to Mercedes-Benz parent Daimler in exchange for delivering next generation engines and electronics that meet the latest emissions rules.

Volkswagen’s commercial vehicles division is trying to build itself into a global truck manufacturer having absorbed Germany’s MAN and Sweden’s Scania, while Navistar is looking for a technology partner to build engines that can meet ever more stringent emissions rules.

For Volkswagen, Navistar is seen as an attractive target because it has a large North American dealer network, something the German carmaker lacks.

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