DealZone

Truckin’ in China

August 21, 2009

It may be a fertile market, but Caterpillar and Navistar are hardly breaking new ground with plans to set up a joint venture in the People’s Republic. A source tells us the two U.S. machine makers are teaming up with China’s Jianghuai Automobile to set up a truck venture, a source said, hoping to gain a foothold in China’s 150 billion yuan ($22 billion) heavy truck market. But while the market may be fertile, it is a crowded space for foreign firms, with Daimler, MAN and others already tied-up with local partners.

Heavy truck sales in China rose 11.75 percent to 541,256 units in 2008, more than double the level in 2003, according to Nomura Securities, and are set to rise in the coming years on state pump-priming and infrastructure development.

While the money might be there, demand might not be for bourgeois trucks. “Foreign truck makers face a much bigger challenge in China comparatively because an Audi is a status symbol, while a Volvo truck can only push up trucking firms operating cost,” said Chen Qiaoning, an industry analyst with ABN AMRO TEDA Fund Management.

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1. Navistar’s U.S. Market Share
a)Through June:
Class 6 trucks: International-branded 49.1% (No.1 by manufacturer)+ Ford- branded 10.2%. Total 59.3%.
Class 7 trucks: International-branded 37.1%(No.1 by manufacturer) +Ford- branded 6.8%. Total 43.9%.
b)Class 8 trucks thru July: 29.4% (No.1 by brand), + CAT-branded trucks later this year.

2. Trucks
a)Navistar is the largest combined truck maker in North America and the fourth largest in the world. In ’08, for the US and Canada, Navistar was No. 1 in Severe Service trucks (37% market share); No. 1 in Medium Duty trucks (36%); No. 4 in Heavy Duty trucks (19%).
b)Navistar makes trucks in the US, Canada,Mexico, Russia, South Africa, Taiwan (military with local partner). In India, according to one of its VP quoted in the press, in commercial vehicles Mahindra-Navistar is No.2.
c) For Ford, Navistar makes medium duty trucks under a joint venture 75% owned by Navistar.
d) For Caterpillar,Navistar makes (starting later this year) CAT-branded construction and other severe service trucks for the US , has a joint venture for diesel engines and commercial and construction trucks with International and CAT nameplates for woldwide distribution (except North America and India) through Navistar and Caterpillar sales outlets.
e)In China, Navistar and CAT will make trucks with a local partner.
f)Navistar purchased the RV business of Monaco Coaches.
g)Navistar sells trucks in some 90 countries through some 1,100 dealers in some 75 countries, including Afghanistan, Iraq and other Middle East countries, and South Africa.
h)President Obama went to a Navistar plant and awarded a grant of $39MM for the development of electric trucks by Navistar, the sole truck maker to receive such grant.

3. Diesels
a) “Navistar is the leading manufacturer of diesel engines for commercial and consumer vehicles for on-highway, off-road, and industrial markets around the world”, asserts Navistar.
b)The leader in commercial diesel hybrids is Navistar, according to TruckNet
“Hybrid Diesel Engines: A $20 Billion Dollar Market”, is the headline in another article.
c) Navistar is the sole EGR EPA10 compliant OEM.
d)Navistar makes diesel engines from 2.8 lit through 13 lit (and next year 15 lit) for automotive, agricultural, marine and other applications.
e)In North America, Navistar has 42% of the midrange diesels market and 64% of school buses engines.
f) In South America, Navistar has 57% of the wheel tractor diesels market, 22% of commercial vehicles diesels, 35% of all commercial and consumer vehicles diesels.
g) In Asia and Eastern Europe, Navistar is expanding its diesels markets.
i) In North and South America, Navistar manufactures diesels.
j) In India, Navistar-Mahindra will soon start making diesels.
k) In China, Navistar/Cat will make diesels for medium and heavy trucks with a local parnter; Navistar licenses its technology to one of the largest diesels makers for SUVs etc.
l)) In Korea, Navistar is developing diesels engines for Daewo buses.
m) Navistar’s customers include Ford, GM, Nissan, Land Rover, Volvo, VW, MAN,Case New Holland, Marcopolo Buses, Valtra, Massey Ferguson; as well as Catepillar for EGR .
.
4. Buses
a)In ’08, Navistar was the No.1 maker of School Buses in the US ( with a 55% market share) and in the world.
b)Navistar makes commercial buses for North America, and with a joint venture with a Brazilian company will make commercial buses for global distribution.

5. Military
In ’08, Navistar was the largest producer of Mine Resistant Ambush Protected Vehicles with a market share of 40%, Ongoing military sales of a variety of vehicles will exceed $2 billion, plus the potential for additional contracts such as the $20B+ JLTV and other programs for the US and its allies. In Kuwait,there is a “Camp Navistar”.

7. Goal
As stated in the Annual Report: Sales $15B+, Income Before Income Tax $1,270-$1,100MM.
Shares outstanding,diluted: 71MM

Posted by Shine | Report as abusive
 

With automobile and in particular truck demand decreasing in many countries, no wonder that the marketing strategists view developing countries with growing economies as a gold mine. However with such an unprecedented competition, all the revenues might get wiped out due to a sale price with a minimum margin.

 

I am gratefull to Chris and Shine to provide us with these nice data.
Up to now, from my cellar, the best I could squeese out was that Nav. made 2.138 trucks in the beautifull month of May 2009, probably excluding Mil.Specs.

Best regards, moderator included.

 

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