GM is considering selling its medium duty truck division to Navistar.
The automaker sold 59,000 medium duty trucks in 2006, according to Reuters. The trucks are sold under the names of Kodiak, TopKick and Isuzu T-Series. The business is non-core and a potential sell-off would contribute to GM’s current restructuring by cutting costs and jobs.
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A report in a Flint local newspaper said that a GM union official had confirmed it was aware of talks between the two parties, although the United Auto Workers had not been informed officially. The report added that Navistar employees had recently visited the plant.
Navistar is a leading manufacturer of heavy and medium trucks. Shares in the company were suspended on the New York Exchange earlier this year because it has got behind on its regulatory filings. Navistar attributes the problem to an accounting issue.
Shares have been traded on an electronic bulletin board, known as the ‘pink sheets,” and the share price has risen in recent months, according to the Chicago Tribune. Shares have risen further in recent days on speculation of the acquisition of the GM business, which one investment analyst said could add $US0.50 to $1 per share to Navistar’s annual earnings by boosting the company’s capacity utilisation.
On the downside, Navistar is currently embroiled in a dispute with Ford over a contract to supply diesel engines in Ford heavy duty vehicles. Navistar is seeking damages from Ford after it emerged that Ford is planning to develop its own diesel engines. Ford counter-sued over warranty costs and engine prices in January.
An agreement with GM could allow Navistar to sell large engines to Ford’s rival, should the Ford relationship collapse.
GM is also in talks to sell its Allison Transmissions division, which makes transmission systems for heavy vehicles.
