Mack Trucks and its French parent Renault see huge potential with AB Volvo’s agreement to buy Renault’s truck business.
The new venture, announced April 25, will form the world’s second largest truck manufacturer after Mercedes. As part of the deal, 100% of Renault V.I./Mack shares will be swapped for 15% of AB Volvo shares. In addition, Renault plans to acquire an additional 5% of Volvo stock on the open market bringing its stake to 20%, the maximum allowed, making Renault Volvo’s largest shareholder.
Commenting on the proposed partnership, Mack president and CEO Michel Gigou said: "This agreement will make Mack part of the world’s second largest truck group and will provide us with even greater opportunities for continued profitable growth.
Renault VI in Europe and Mack in the U.S. currently rank as the world’s fourth largest heavy truck manufacturer with 70,000 vehicles over 32 tons (Class 8) sold in 1999 behind Mercedes (which includes Freightliner), the Paccar brands and Volvo. Combined with Renault VI/Mack, Volvo will become the world’s second largest truck manufacturer and the third largest diesel engine manufacturer.
Volvo and Renault VI/Mack will retain their respective identities and brand names—Renault trucks in western Europe and Mack in the U.S. as well as Volvo trucks. Separate sales and dealer organizations for each brand name will be continued as well the four U.S. manufacturing and assembly plants tied to the Mack and Volvo products.
In 1999, combined Mack and Volvo Class 8 U.S. market share was 23.8% putting the combo in second place behind Freightliner’s 31.95% (37.32% when combined with Freightliner subsidiary Sterling). The next largest U.S. players are Paccar’s Kenworth and Peterbilt combined shares at 21.1%. International (Navistar) ended up 1999 at 15.88% share nearly six percentage point behind the Paccar companies.
Volvo and Renault spokesmen say it will take to the end of 2000 to complete the total transaction, assuming there’s no government antitrust interference in Europe or the U.S. Volvo Trucks North America president Marc Gustafson has already said that the Volvo and Mack product lines complement each other and will make a good fit.
Recent Class 8 trade volumes have been lower than predicted, which means pricing has been more stable than expected for used trucks, according to J.D. Power & Associates.