Last year, Navistar and Traton Group (then known as Volkswagen Truck and Bus) closed their strategic alliance, which included an equity investment in Navistar by Traton Group and framework agreements for a procurement joint venture and strategic technology and supply collaboration. We’ve seen the fruits of that partnership already in the International A26 engine, a new platform built from the MAN D26 engine Compacted Graphite Iron (CGI) crankcase.
Behind the scenes, the strategic alliance has helped Navistar stay lean and leverage resources at a global scale.
“It gives us the opportunity to lower direct material costs, which is extremely exciting,” explains Troy Clarke, Navistar’s president and chief executive officer. “We can tap into global scale because we have about 50% of the volume of which the group buys; so, we become part of a much larger buy on global scale. We can get into a lot of commodities, certainly, and emulate the purchasing power of three large players.”
(Quick note: Those three players would be Traton’s European MAN and Scania brands, plus North America’s Navistar.)
“[Navistar] wanted about $100 million worth of savings, and we’re getting it. It works. There’s tons of value in buying on a global scale.”
