GM to sell medium-duty truck unit to Navistar It's Official

[Shotgun]

Not sure if this has posted yet.

http://www.reuters.com/article/marke...0071220?rpc=44

http://online.wsj.com/article/SB1198...oo_hs&ru=yahoo

[chevydlrmn]

I remember something of this a while ago.

[DuSpinnst]

Good, GM needs to focus on cars. The MD market isn't core.

[2648562]

So, I guess this means GMC is no longer professional grade?

[doh]

http://biz.yahoo.com/rb/071220/gm_navistar.html?.v=1

DETROIT (Reuters) - General Motors Corp (NYSE:GM - News) has reached a tentative agreement to sell its medium-duty truck business to Navistar International Corp (Other OTC:NAVZ.PK - News), the two companies said on Thursday.

GM sells medium-duty trucks under the nameplates Kodiak, TopKick and Isuzu T-Series. The automaker made 59,000 medium-duty trucks in 2006, representing nearly 12 percent of the market.

The deal, terms of which were not disclosed, is expected to be completed in 2008.

The move to sell the unit would be consistent with GM's strategy as it tries to focus more on its core business of making cars and sport utility vehicles.

Under the deal, Navistar would purchase certain assets, intellectual property rights to manufacture GMC and Chevrolet brand vehicles in the class 4-8 gross vehicle weight range and distribution rights for GM's medium-duty truck unit.

[sprchev1]

Here is the announcement from Navistar:

December 20, 2007
GM AND NAVISTAR REACH TENTATIVE AGREEMENT ON
MEDIUM DUTY TRUCK BUSINESS
General Motors Corporation and International Truck and Engine Corporation have
entered into a non-binding memorandum of understanding under which Navistar would
purchase certain assets, intellectual property and distribution rights for GM.s medium-duty truck
business, the two companies announced today.
As proposed, Navistar would acquire GM.s medium-duty truck business, which includes
assets and intellectual property rights to manufacture GMC and Chevrolet brand vehicles in the
class 4-8 gross vehicle weight range. It also includes purchase of the related service parts
business. Navistar would sell a competitive line of Chevrolet and GMC vehicles and service
parts through GM.s proprietary dealer network in the United States and Canada.

The agreement is another step in GM

.s plan to focus on designing, manufacturing and

selling cars and light trucks globally. The deal would leverage our strengths in commercial

trucks and engines, and advance our strategy to build scale and reduce costs.
Troy Clarke, president of GM North America, said, .Navistar.s expertise in building
International® brand commercial trucks and its track record in the medium-duty segment

makes them an excellent choice to acquire and continue growing the business. We intend to

work closely with Navistar to make this transition seamless to our dealers and customers..
.This is another example of how we.re strategically growing our business for trucks,
engines and parts, building scale and reducing costs,. said Dan Ustian, chairman, president
and CEO.

.We are proud to incorporate the GM truck brands into our portfolio, and will utilize

the scale to build on the success of both the International and GM product lines and their

respective distribution networks..
Navistar would add the GMC® TopKick and Chevrolet® Kodiak truck brands to its

growing portfolio of brands, which currently includes International

® brand trucks and tractors,IC® brand buses, Workhorse® brand chassis for motor homes and step vans, andMaxxForce® brand engines.

When a deal is definitively concluded, production of the vehicles would move from GMs

plant in Flint, Mich., to a Navistar facility to be named. GM would retain ownership of its Flint

plant and continue to build other products at the facility.
GM will continue its medium-duty truck relationship with Isuzu to market W-Series
trucks through GM.s medium-duty dealer network.
The deal is expected to close in 2008 subject to completion of satisfactory due
diligence, the negotiation of a definitive purchase agreement, customary regulatory clearance
and board approval. Upon closing, transition of the business could take several months to
conclude.

Why is this good for Navistar?
Overall, this is an opportunity to leverage our expertise in the truck business to strengthen the GMC,
Chevrolet and International product lines and businesses, and it supports our company strategy

Growth . it would add $1.5+ billion to our top line revenues, helping to put us closer to our $15

Billion goal

Competitive Cost Structure . the scale and synergies would improve operating efficiencies and

utilization of our engineering and manufacturing resources

Great Products . we would add GM.s established products, brands, service parts and a network of

550 dealer locations

People . it would present career opportunities for Navistar employees and enable the organization

to learn and build upon our commercial truck experience

Why now?
The business is on the market now. GM is in the midst of a turnaround plan to focus on cars and light
trucks and has decided to sell some pieces of its business, including the medium-truck business. GM
has an obligation to provide these product lines to dealers and needs to find a best-in-class supplier for
its dealers. For Navistar, it would fit well with our strategy to grow our business by leveraging the
strengths of the GM and International product lines and gaining scale to improve the cost structure for
both.
Is this like the Blue Diamond Joint Venture?
No, Blue Diamond is a joint venture where Ford and International run their businesses separately. This
would be a purchase where Navistar runs the GMC/Chevrolet truck business with GM retaining certain
rights and obligations. That means Navistar would own the intellectual property, do the design,
engineering, purchasing, manufacturing, marketing, sales, service, etc.
Why has the company not yet communicated where the GM products would be moved?
As you read in the news release, this is just a tentative agreement. When the definitive agreement is
executed, the company will announce where various elements of assembly will be introduced. In
addition, the company is in important discussions with state and local governments to finalize their
financial incentive commitments and support.
Would this lead to more volume for MaxxForce engines?
Future powertrain plans for the GM trucks are under development and yet to be determined. GM
currently offers gas engines and Isuzu, Duramax and Caterpillar diesel engines. Growth of the
International truck line-up would lead to increased volume for MaxxForce engines.
How is Navistar Parts involved?
Navistar Parts Group would offer parts sales and service support to GM truck and parts customers using
its current operations and systems. This would increase operational scale and parts revenue.
What.s next?

We will move forward with due diligence, regulatory review and negotiating a definitive agreement. A

new vehicle center team will be formed and they will continue to develop plans for how we would
transition engineering, manufacturing, purchasing, distribution, service, parts and all of the related
systems. The goal would be a seamless transition for GMC and Chevy truck customers.

[bone]

So both GMC and Chevy medium duty trucks will continued to be sold,however,they will be manufactured by Navistar. This has to be a win win situation for both G.M. and Navistar.

[Highlander]

I don't like this one... I feel as if this is cutting a bit too close to the core compentencies they talk about. Medium duty truck engineering I would think has some tie-ins with 2500HD and 3500 type trucks. Engineering experience and expertise to be shared as well as some common components.

This is more like losing weight by amputating an arm instead of trimming the fat with a bit of liposuction!

As a bit of a side note, how is Ford's bigger super duty doing in sales? I thought GM might counter that move, but that seems unlikely now.. Perhaps Ford went after a market that doesn't exist? I don't know.

[ByTheLake]

Originally Posted by Highlander

I don't like this one... I feel as if this is cutting a bit too close to the core compentencies they talk about. Medium duty truck engineering I would think has some tie-ins with 2500HD and 3500 type trucks. Engineering experience and expertise to be shared as well as some common components.

I feel the same way. Here's an excerpt from GM's own web site:

" To be the world leader in transportation products and related services."

I guess medium duty trucks aren't transportation products.

Seriously, this must simply reflect the reality of GM's situation. GM is a business, first and foremost, and as such it must earn a profit or perish.

[stevecmh]

it just sad to see another GM brand being sold.. but oh well if it has to go it has to go

[tomcat_cool17]

Most of the Kodiaks get turned into commercial rigs anyways, and they haven't changed greatly in a while. I wonder how they are going to split the Flint plant up since they make the HD trucks, as well as the TopKicks there in the same facility. I'll have to keep an eye out on the signs around the place and see what happens.

[bobojay]

I'm concerned about the folks in Flint. What will they build now?

[Robert Ryan]

So both GMC and Chevy medium duty trucks will continued to be sold,however,they will be manufactured by Navistar. This has to be a win win situation for both G.M. and Navistar.

The other complication, is some cashed up European Truck Makers are looking at Navistar as a Takeover target. If that happens do the rights get transferred to MAN/ IVECO? MAN has VW part ownership, IVECO spinoff of FIAT.

[nikhil]

Navistar is trying to find another client for its powerstroke engine since it is divorcing Ford. GM will get revenues on the sale of GM trucks sold by Navistar. Plus there is great potential for the GM trucks as military trucks; Navistar is the biggest supplier of MRAP trucks right now. Plus its partners/subsidiaries Workhorse Custom Chassis and Monaco Coach have been using GM engines and allison transmissions. Navistar engineered the F650, F750 trucks.
I see this as benefiting both the companies.

[AndrewGS]

I think it sucks.