VWB&T_NavistarVolkswagen’s Truck & Bus division has formed an alliance with US commercial vehicle maker Navistar that will see the two companies share powertrain technology and parts supply, as well as the establishment of a joint procurement venture for global sourcing.

VW Truck & Bus includes the brands MAN, Scania and VW Caminhões e Ônibus (MAN’s subsidiary in Brazil). The agreement with Navistar will give it access to the North American market for the first time. VW Truck & Bus will take a 16.6% stake in Navistar as part of the deal, worth around $230m. However, the commercial vehicle makers will remain independent companies.

The alliance will focus on common powertrain systems and will enable close collaboration across future commercial vehicle development, according to the companies.

“Our collaboration, especially with regard to the powertrain, will considerably increase our synergy potential,” said Matthias Gründler, chief financial officer of VW Truck & Bus. “Navistar will be able to profit from excellent powertrain technologies and we, in turn, will benefit from significantly higher volumes. Initiating this strategic alliance now will enable us to implement the requirements of Navistar into our joint component platforms from the get-go.”

The two companies said they would establish an Alliance Board consisting of top-level representatives from both sides to oversee developments.

“We are very pleased to partner with a global leader who shares our view of the world, in an alliance that will deliver multiple benefits and is consistent with our open-integration strategy,” said Troy Clarke, president and CEO of Navistar. “Starting in the near term, this alliance will benefit our purchasing operations through global scope and scale. Over the longer term, it is intended to expand the technology options we are able to offer our customers by leveraging the best of both companies and enabling Navistar to deliver enhanced uptime.”

Navistar said it expected “cumulative synergies” worth $500m in the first five years of the alliance, giving it improved liquidity and a better development spend. It also stated that the deal would give its customers access to leading products and services through the collaboration on technology.

Navistar also said the alliance would explore all aspects of commercial vehicle development, including advanced driver assistance systems, connected vehicles, platooning and autonomous technologies, as well as electric vehicles and cab and chassis components.

Pending regulatory approval and the finalisation of the procurement plan, the alliance is expected to be up and running later this year or early in 2017.