Is Troy Clarke about to start smiling?

Rumours suggest Volkswagen may strike a deal with Navistar International Corporation.

This could pave the way for the German company to enter the North American truck market – and bolster Navistar’s coffers.

The news, reported by Reuters cites three unnamed sources, is expected to be confirmed officially on 6 September.

According to sources, VW will provide truck engines to Navistar in exchange for a stake in the truck manufacturer. 

The Wall Street Journal claims the proposed stake is 19.9 per cent. Neither side is commenting on the report at this stage, but it would make sense in a number of ways.

VW has two major truck brands – Scania and MAN – both of which lack presence in the pivotal North American market – a big hole in its armoury.

For Navistar, this deal would bring a long-awaited, credible partner in engine development, an area where it is weak. Navistar has had to rely on Cummins to dig it out of a hole created by its former boss, Daniel Ustian.

Meeting ever-tightening global emissions standards is a price that has to be paid if entry is to be gained in key markets.

Cummins is the only independent North American engine supplier, which explains why Navistar has had to lean on the Columbus, Indiana company.

But with Volkswagen now on the scene, Cummins could find its sales under pressure.

Both Scania and MAN have formidable diesel engine technology. Navistar itself had to adopt MAN technology to secure its place in the North American truck market. MAN 10.5-lire and 12.4-litre engines built under licence from MAN and manufactured at Navistar's engine plant in Huntsville, Alabama use compacted graphite iron (CGI). Scania too is an advocate of CGI and uses the high-strength material in some high-performance engines.

This deal could end Navistar’s search for an engine partner, plug VW’s North American gap and put a nasty dent in Cummins’ sales forecasts for a couple of years ahead.

Many will recall a former engine deal in which Ford purchased 6-litre V8 Power Stroke diesel engines from Navistar. In October 2013, Ford Motor Company agreed to settle a class-action lawsuit over claims that it sold defective diesel engines in its 2003-07 Super Duty pickups and E-series vans.

The now discontinued diesel V8 6-litre, manufactured by Ford's former diesel engine supplier, Navistar International Corporation, had myriad problems with the fuel system, turbochargers and other major components.

In its settlement, any US    purchaser and lessee of any 2003-07 Ford vehicle equipped with a 6-litre Power Stroke diesel engine is covered if the vehicle's exhaust gas recirculation (EGR) cooler and EGR valve, oil cooler, fuel injectors, or turbocharger was repaired, replaced or adjusted prior to 135,000 miles or six years.

 All of the rumours re Navistar and Volkswagen represent speculation that awaits confirmation.

If it does happen, it will have major implications that could lead to Volkswagen taking over Navistar International Corporation.

In one swoop that would end all Troy Clarke’s problems.

He for one could be the one left smiling broadly. 
Clarke has not had much to smile about since he took the helm at the beleagured Navistar. Should VW take 51 per cent then this could give a whole new persepctive to Clarke's outlook on life.