M&M to buy out Navistar's stake in truck JVs
18 December 2012
Mahindra & Mahindra, India's largest utility vehicles maker, said today it will buy US-based partner Navistar International Corp's stakes in the their two joint ventures in India for Rs175 crore ($33 million).
As part of the deal that is expected to be completed by January-February next year, Navistar will continue to supply technology to Mahindra while it will also continue to use Mahindra's engineering services support for its US market.
"While the Indian market has not expanded as we had expected and industry challenges there continue in the near term, we still see promise in India going forward," Navistar president Troy Clarke said in a statement today.
M&M president (automotive and farm equipment sectors) Pawan Goenka said, "This is a friendly buyout as Navistar has decided to focus on their immediate priorities. Overall, we will be paying around Rs175 crore for their stake in the two joint ventures."
Navistar and M&M had set up their first joint venture - Mahindra Navistar Automotives Ltd – in 2005 to manufacture trucks and buses in India. This was followed by another joint venture, Mahindra Navistar Engines Pvt Ltd in 2007, for producing engines in 2010. M&M had a 51 per cent stake in both ventures.
The financially troubled Navistar is reportedly looking to dump its underperforming businesses. Mahindra Navistar has struggled to gain a significant foothold in India's commercial vehicles market, of which Tata Motors and Ashok Leyland control around 70 per cent.