We’ve been hearing since the IAA Commercial Vehicle Show in Hannover, Germany, last year that Traton, Volkswagen’s newly created global truck and bus business unit, is aiming for an initial public stock offering sometime this summer.
There have been a couple of hiccups with that plan. In March, VW announced it was putting the IPO on hold, presumably while the company sorted a few things out. The complexities of managing, promoting and enhancing multiple truck and bus brands on every continent cannot be overstated. But things must have gone well, because just a couple of weeks ago, Traton announced the IPO was back on track and proceeding accordingly.
Meanwhile, on this side of the Atlantic, Navistar announced this week that after more than a decade of legal battles, it is moving ahead in settling a number of class action lawsuits brought by customers who bought its EGR-only MaxxForce diesel engines.
The MaxxForce design featured exhaust gas recirculation as its primary emissions reduction mechanism. That worked well enough for the initial round of diesel particulate and NOx reduction regulations implemented by the U.S. Environmental Protection Agency and the California Air Resource Board. However, to meet the even more stringent 2010 emissions regulations, all other North American diesel engine manufacturers went with selective catalytic reduction (SCR) technology.
Navistar, for a variety of reasons, elected to essentially double down on EGR technology for 2010 MaxxForce engines, with decidedly poor results. The extra heat generated by the beefed-up EGR system, coupled with air management problems, led to reliability problems and customer revolts that threatened the health of the sole surviving business unit left from the massive International Harvester Company.
However, a new management team fought back and slowly, but steadily, began to turn the beleaguered truck maker’s fortunes around. But it wasn’t until Navistar and Volkswagen entered into a partnership agreement – along with a healthy influx of cash from Wolfsburg, Germany – that many industry observers finally felt Navistar was going to weather the storm.
The lingering MaxxForce suit has been a millstone around Navistar’s neck for years, so it's no wonder the company wants to resolve this issue, freeing it up to finally move on to new era of products and technology.
But there may be more to the picture than that.
Volkswagen – and now Traton – have made it clear for years that it intends to go toe-to-toe with the two other global heavyweight truck and bus manufacturers – Daimler and Volvo. Moreover, the company has said repeatedly that having a robust, competitive Class 8 product in North America – which is still the largest heavy-duty commercial vehicle market in the world – is absolutely integral to that plan. And obviously, Traton’s contender in North America is Navistar.
Many industry observers see it as likely that eventually, Traton will follow the trail blazed by Volvo and Daimler to get into the North American Class 8 game: Acquire an established OEM, and then begin integrating its proprietary engine and powertrain technologies into the vehicles as new designs come off the drawing board.
Volvo and Daimler were doing so in a time when many Americans were uncomfortable with the idea of “foreign” technology in their trucks. And so they slowly undertook those gradual technology introductions over with decades-long introduction and familiarization strategies.
Today, global technology in heavy trucks is considered a given. Which means Traton, when it finally decides to go all-in on Navistar, will be able to initiate a vastly accelerated adoption curve for its technology, which will certainly shake the North American truck market up and be fascinating to see unfold in real time. (And in fact, the two companies are already working together on designing the next generation of powertrains, including electric.)
So – are the recent moves by Traton and Navistar simply two companies taking care of business? Or are they harbingers of something bigger yet to come?
Time will tell. But it’s going to be interesting to see what the next moves from both OEMs will be.
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