The Return of Navistar Financial

Navistar has brought back Navistar Financial’s retail business as it prepares to start delivering trucks with the new International S13 integrated powertrain — and as it looks ahead to helping customers obtain electric trucks.

A captive financial services provider for Navistar, Navistar Financial provides customers with tailor-made, competitive loan and lease financing.

Patricia Brault, VP of sales and business development for Navistar Financial, explained in an interview that the re-launch lines up with Navistar strategy both short- and long-term.

Short-term, a captive finance company was important to the launch of the S13.

Navistar is starting to market a fair market value lease for the launch of the S13, Brault said. That’s designed to protect customers for residual risk. Rather than owning the equipment, at trade cycle, they aren’t responsible for that end value. They can return the truck to Navistar, assuming it meets the lease terms, regardless of what the residual value may be at that time.

Funding the Transition to Sustainable Transportation

“Longer term, Navistar is committed to leading the transition to sustainable technology, moving to battery-electric, and that’s not a little step,” she said. “Understanding it’s a significant change for our customers, we knew we needed a captive finance company ready to support that transition.”

Battery-electric trucks are more expensive to acquire than traditional diesels, Brault acknowledged.

“That has a customer-facing implication as they work costs into their business,” she said. “From our side, we have to fund that…. Levering Traton will help us ensure competitive funding.”

One of the big questions about electric trucks is the unknown residual value. “Someone’s got to lean in, and as a captive, that’s our obligation.”

Why Does Navistar Need a Captive Finance Company?

Brault has been with Navistar Financial since 1993, “so I’ve seen it all, and I’ve never been more excited than I am right now.

“We feel like we’ve been missed. We’ve heard from dealers and customers that every other OE had [captive financials]; not having one was a competitive disadvantage.”

A captive finance company looks at things such as credit risk and offering flexible products through a lens that gives a view of its customers in a way that regular bank and financing options don’t have.

It’s especially important in a time of rising interest rates and economic uncertainty.

“Rising interest rates are part of reality,” Brault said. “In difficult times, the value of a captive is even more. When times are easy and banks have plenty of liquidity, a captive is a ‘nice to have.’ In a freight recession or general recession, having dedicated financing to the transportation industry is going to be more important. We’re not going to change our scorecards or try to lend less in that environment.”

The Advantages of Being Part of Traton

Another factor in the return of Navistar Financial is that it now has the backing and financial strength of the Traton Group, which acquired Navistar two years ago. Traton Financial includes captive financial companies for other Traton brands around the world — Scania, VW Truck and Bus, MAN, and now Navistar Financial.

“Traton Financial will provide scale, the ability to fund ourselves, to have competitive funding, supported by a global finance company,” Brault said.