Navistar has signed a licensing agreement with Chinese diesel engine maker Dongfeng Chaoyang Diesel Co., allowing it to manufacture and sell certain Navistar engines in China.
Navistar has, of course, an ongoing dalliance with MAN. Which is, in turn, trying to buy Scania, not least because it sees an opportunity to go up against Volvo. Major Scania shareholder VW isn’t so sure.

This week Volvo became the biggest shareholder in – Dongfeng Nissan Diesel. For added larks, Ashok Leyland, itself being wined and dined by the Gothenburg lotharios, has today announced that it will get its latest squeeze – Czech manufacturer Avia – onto the forecourts of India within a couple of years. Which will – given DaimlerChrysler’s current rather unseemly courtship of Eicher – probably cause a bit of a headache in Stuttgart. And possibly in Munich as well – MAN’s JV with Force Motors is about to be blessed. Don’t forget Sodertalje too - where the ink is still drying on Scania’s Indian distribution deal with Larsen & Toubro Limited.

And let us not fail to include Volvo – which now has access to cheap trucks courtesy of Nissan Diesel – and would probably like to move a couple in India.

There’s a lot of M&A talk taking place at the Paris Salon d’Auto – for this year, at any rate, Europe’s biggest car show. Two issues are dominating: will Carlos Ghosn choose GM or will he opt for Ford, and will MAN be successful in its bid for Scania?

With the latter deal, VW finds itself in the position of kingmaker. But, increasingly, market rumours point to the German car manufacturer as having been scooping up a fair bit of MAN stock.

What’s going on? Is VW gearing up to make a bid for MAN – no, says chief executive, Bernd Pischetsrieder. He knows nothing of those market rumours, but he does see a "good business case" for MAN and Scania to combine with VW's Brazilian heavy-truck unit. What he doesn’t like is all of the nastiness. “A hostile approach from either side would not be helpful in concluding a deal,” is his reported view.

There can be little doubt that MAN’s punt for Scania is a defensive one. Why bid over the odds, at the top of the market, and at the start of a downturn? No sense in this at all, unless a bigger dog is sniffing at you.

We can see an argument for Paccar linking up with Scania. The same logic applies – albeit less compellingly – with MAN joining the Bellevue family. You’d never discount Toyota – especially as Hino has just tied up a distribution and co-operation deal, and has therefore tidied up its to date rather bashful relationship with Scania.

India is back on the agenda this week, as DaimlerChrysler – which already holds a 6.8 per cent stake in Tata Motors and a 3.6 per cent stake in Eicher through its Fuso unit – looks to bolster its presence in the region.

Tata is by far the biggest player here, with Ashok Leyland coming in second. Eicher – best known in the West as the owner of the Royal Enfield brand – is a long way behind the big two, but seems to be DC preferred choice. In part, Tata’s deal with Fiat has probably parked any opportunity for a non-Fiat CV deal at present, leaving Eicher as the only game in town.

There’s an interesting report in the Times of India today, detailing the increasing attentions being paid by three Chinese OEMs – Chery, SAIC and Beiqi Foton – to the Indian auto sector.

It’s the latter that grabs our attention. Foton – or a JV with the same – has been part of the Mercedes Benz game plan for a while now. But it looks like the Chinese are playing a bit coy. Indeed, when we spoke with MB CV boss Hubertus Troska at the IAA last week, we asked a simple question. In the light of his own problems in terms of seeing the deal through with Foton, and with CNHTC’s rejection of Volvo’s overtures, is the landscape shifting?

“It sounds like it,” was his response. “We’re getting signals that maybe Joint Ventures are not the way that Beijing now wants to play anymore; maybe equity participation has more potential.”

We’ve harboured suspicions of the Chinese market for quite some time now. It all sounds very good, but nobody has shown us a return as yet. Now it seems likely that the Chinese OEMs – rich with technology as a result of JVs with Western manufacturers – are getting ready to compete with their own partners in third markets. Given that this is very much a level playing field, we can see a storm or or two on the mid term horizon.

Get yourselves on over to Bloomberg where there’s an update on the whole MAN-VW-Scania mergerfest. For that matter, Forbes will do. According to unattributed reports in German magazine Focus, it looks like the deal is on, and VW's Chief Executive Officer Bernd Pischetsrieder may become MAN AG's supervisory board head under a transaction that will form a new company out of MAN's truck unit and Scania AB.

Interesting comments from Force Motors chairman and managing director Abhay Firodia are reported in the Indian press today. Force – formerly Bajaj Tempo – showcased a few of its products at the IAA show – it has a 70:30 JV with MAN based at Pithampur – and it looks like things are beginning to move. The JV has a capacity of 24,000 trucks and is expected to reach 50 per cent export level in three to four years. The vehicles will be branded as ‘MAN’ trucks and will, according to Firodia, be marketed globally. More to the point, 90 per cent of the components therein will be indigenous by March 2007. Where this fits with the whole Scania thing, or, more obliquely with Munich’s recently inked deal to develop its Iranian business with local OE Avrin remains to be seen. But a low cost, high brand product for a global market is an intriguing prospect.

Indian OEM Mahindra & Mahindra (M&M) has been rumoured to have been on the acquisition prowl for a while, and has now announced that it is buying 68 per cent of Jeco Holdings AG, one of Germany’s biggest forging companies, and supplier to the likes of DaimlerChrysler, MAN, Volvo and Renault. With this, Indian companies own and operate two of Germany’s biggest forging companies. In early 2004, Bharat Forge acquired the German operations of CDP GmbH.

Although no price has been mentioned by either M&M or Jeco, some reports suggest that the deal is valued at around €140 million. The gameplan seems to be to merge Jeco with Mahindra Automotive Steel, in which M&M holds a 47 per cent stake. 
Jeco has an existing forging capacity of 100,000 tonnes per annum, and manufacturers transmission, engine and axle parts, hubs, gears and piston heads.

Added to M&M’s existing capacity, the new venture will be able to turn out around 160,000 tonnes per year.

Interesting to read over at dcvelocity.com that both UPS and DHL are moving ahead with significant hybrid fleet trials. UPS is looking at what is claimed to be the first hydraulic hybrid diesel urban delivery truck, billed as the world's most fuel-efficient and cost-effective delivery vehicle. This was developed through a partnership between the Environmental Protection Agency (EPA), the U.S. Army, UPS, International Truck and Engine Corp. and Eaton Corp.

DHL, on the other hand, has been using a veritable panoply of low emissions machinery. It launched its "Green Logistics" environmental initiative in Japan earlier this year, with the net result that DHL’s Japanese drivers find themselves at the wheel of anything from the new Fuso Canter Hybrid, through to a fuel cell-powered Mercedes A Class through to – a bicycle. Hybrids were a big deal at this year's IAA. Big fleet interest may yet serve to drive their acceptance within Europe.

It’s beginning to look as if the MAN-Scania-VW situation is heading towards closure, with the hunter turning hunted and in no short order. Reports over at newratings.com speak of a reverse bid that would see Scania – backed by VW – taking control of MAN. Further details – and some comment from E*Trade’s Lee Humphreys – can be found at Bloomberg. Some analysts are talking of a final bid price of around €81 per share for MAN, which closed on Tuesday €4 or 5.71 per cent up at €74.00

Comical Ali might have pulled it off, but it’s difficult to think of anyone else who could talk up the prospects for the US truck industry in 2007. Now it seems that the mainstream US media has suddenly awoken to the fact that there are bad times ahead. This article refers to Freightliner, but it would apply - we think - to the rest as well.

There’s been an awful lot of smoke blown over the previous months about how things are going to be not so bad, the landing soft and that the darkest hour is before dawn. We think that this is a crock. The US Economy is a worrying place at the moment. Political uncertainty in the run up to the November Midterms is growing, and the likelihood of people getting out and spending next year seems remote.

Add to this the EPA 07 emissions shift, and we doubt very much whether a US truck salesman will be able get arrested next year, let alone get an appointment with a truck buyer. In blunt terms, we’ll predict a market downturn of 40 per cent during 2007.

We’ve just received a press release from VW, in which it announces that it has taken a 15.06 per cent stake in MAN. That’s it for now – it says that it isn’t going to make a full bid for the Munich OEM. Interestingly, the release makes reference to an existing hostile bid: "In the light of indications in the market of a hostile takeover attempt of MAN by third-parties, this investment in MAN is essential to secure Volkswagen’s interests."

Things are now beginning to make a bit more sense. With above 30 per cent of Scania and 15 per cent of MAN, it is VW that is fast emerging as a major heavy truck player.

Is there any stopping Tata? It seems to be buying stuff on a daily basis. Today’s crop of purchases include Boston’s Ritz-Carlton Hotel, and, of more note for the truck industry – in which Tata is India’s biggest player – it now looks as if it is about to embark on a £5.5 billion bid for Corus Steel. So much for the emerged markets investing in the emerging: although whispers suggest that Volvo and DC are getting close to taking a lump of Ashok and Eicher respectively, it’s beginning to look as if the investment traffic between Europe and India is running on a very much two-way street.

I was on duty a couple of weeks ago at the IAA truck show in Hanover handing over the International Truck of the Year trophy to Daf Trucks president Aad Goudriaan. The new XF105 beat off the challenge of the Renault Premium and new Volvo FL to scoop the top prize.

The Truck of the Year trophy is given to the truck launched in the previous 12 months which is deemed to have made the greatest contribution to the efficient carriage of goods by road. The jury is made up of transport journalists from 19 European countries.

Numerous reports now point to VW having brokered a deal whereby MAN and Scania will play nicely in terms of their mooted arranged marriage.

MAN has agreed to drop its €9.6 billion (£6.5 billion) hostile bid for Scania to enable three-way friendly negotiations over an alliance with Volkswagen’s Brazilian-based truck division.

We’ve been pondering a bit of late, and it is the humble truck axle that is the cause of our ruminations. A couple of days ago, reports reached us that Tata was having a sniff at American Axle and Manufacturing. No surprise here – Tata is buying everything it can lay its hands upon at the moment. For example, Corus Steel is being courted by the Indian leviathan in a mooted £5 billion deal. BTW, don’t call your broker now. But, just for reference, you could have come in at $16.93 and got out at $18.06 in the space of a couple of hours with AXL.N. Easy money.

Word on the street is that the Royal Mail may be on the verge of breaking its long-standing supply deal with Daf for tractor units as it puts the next order out to tender. Sources close to the mail provider indicate that a change in supplier may be in the offing for its Euro-4 tractors and I'll be surprised if all the makers don't throw their hats into the ring.

Following the last tender process - which took somewhere in the region of seven months from start to finish - for car-derived delivery vans the Royal Mail split the deal between Ford, Fiat and Vauxhall with the former getting the lion's share of the order. Don't be surprised if they do the same for their next batch of tractors, but who will they choose? MAN and Mercedes must fancy their chances on the basis of the recent Euro-4 group test in Commercial Motor.

It’s extremely easy for vehicle manufacturers to make embarrassing naming mistakes, especially when it comes to Latin America. Take Chevy’s discontinued El Camino pickup truck for instance, which literally translates to “The Walk”.

More recently there was the Mitsubishi Pajero. Having realised that Pajero is Mexican Spanish for "w**ker" they sensibly christened it Montero for the Mexican market. Let’s not forget about the Chevy Nova, which means “it won’t go”, or the Mitsubishi LaPuta, which is pretty close to the Spanish for "prostitute".

Perhaps this is why Volkswagen opted for the safe approach when it came to launching its Caddy in Mexico - or is it just a case of a marketing team with absolutely no imagination?

Couple of interesting tales to be had over at Bloomberg this am. Looks like MAN is about to go in to battle with a Chinese OEM over patent infringement, whilst over in Turin, we learn that Iveco is not up for sale.

DaimlerChrysler is to hand over its entire shareholding in its Iranian business to partner Iran Khodro.

According to reports from the Iranian ISNA agency, DC’s management has come under considerable pressure from Chrysler staff, as investments in the Islamic Republic are seen as an increasingly bad thing within the US. Sources within DC have indicated to CM that the main concern is one of US consumer perception, but it would seem unlikely that the Bush administration’s relentless pursuit of sanctions against Iran has passed the German-American NYSE-listed OEM by.

Whilst confusion exists surrounding DaimlerChrysler’s plans for Iran, NYSE-listed Volvo appears to be maintaining the courage of its convictions. Its Iranian partner Saipa Diesel has announced that it is to begin exporting its locally built Volvo trucks to various markets in Africa and the Middle East. An un-named Saipa official is reported to have put a €130 million value on the deal, which will see the export of 2000 FM12, FM9, FH12 and NH12 Volvo trucks over the next year. Deliveries will begin in December.
Saipa is already exporting its Volvo product to Kuwait, with 71 units already delivered, and a target of 200 units in place for delivery by the Iranian year-end in March 2007.
Volvo’s history in Iran goes back to 1934, and it has, to date, exported 60,000 units to the Islamic Republic. In the last five years, Iran has imported over 25,000 units from the Swedish OEM.

Bridgnorth haulier Clive Cowern Transport has just taken delivery of its latest truck - a brand new Renault Premium 440 with a Euro 3 engine. Cowern has another three Renaults due for delivery next year - two Midlums and a rigid 26-tonne Premium.
The firm has switched its allegiance from Scania, and more recently MAN, blaming disappointing fuel returns.

I recently heard a story about the tragic death of a van driver – who was killed after having a head-on collision with a tree. It was a clear day, the driver wasn’t on his mobile phone and he didn’t fall asleep at the wheel. How then did the accident happen?
Well it didn’t take long for the crash investigators to work out the cause of the accident – having found an atlas wedged between the driver’s crushed chest and the steering wheel. He was simply trying to find his way to his next drop, and was in too much of a rush to pull over to check the map. Unfortunately it’s an all too familiar story.
Of course there is a solution, and it’s called satellite navigation. And with this in mind I applaud Citroen for making the Trafficmaster Smartnav sat nav system standard in all new Relay panel vans. As far as I’m aware this is a first in the LCV world, but hopefully not a last. The sooner other van manufacturers follow suit the better.

Prices for New Relay, which claims to have class-leading load dimensions, start at £15,150.

Ford has just announced its third quarter results, and they’re bad.

Losses amounted to $5.8 billion during the three-month period, compared with a paltry $284 million during the same period of 2005. In addition, the company is to restate its results going back to 2001, as a result of an accounting change on interest rate derivatives used to hedge its long-term debt. Interestingly enough, it managed to lose money across every operation, including Ford Credit, for which net profit plunged to $262 million from $577 million.

New CEO Alan Mulally is less than pleased: "These business results are clearly unacceptable," he said in a statement. "Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more fuel efficient vehicles that customers really want."

You have to wonder why it bothers. Chapter 11 by Christmas?

There’s a clear indication as to Ashok Leyland’s future direction in this article published in the Indian press. Not many months after the Indian OEM acquired Czech manufacturer Avia whilst waving a – so we hear – less than tearful farewell to Iveco – a strategy is beginning to emerge. And it doesn't seem to have much space for European suitors such as Scania, Volvo or DC.

It’s that third quarter reporting time again, and the results are beginning to trickle through.

Following Ford’s disaster as reported yesterday, both Volvo – with net income up by 34 percent to $540 million / £279 million and Paccar – with net profit up 32 per cent to $403.6 million / £215.83 million – have some reason for good cheer.

I have just spent the last couple of days in Gothenburg driving the new Volvo Midlum and Premium…errrm…I mean the new Volvo FL and FE! But I’m not going to waste valuable blogging space telling you what they are like to drive – after all you can read all about it in next week’s Motor Transport. Instead I’m going to talk about something far more exciting – an airport fire tender.
The military, which is in charge of airport fire/rescue in Sweden, has apparently decided that it’s time to replace its ageing F12s with something a bit more exciting – a fleet of 6x6 FM12 460s. And I was allowed behind the wheel of one.

This is without a doubt one of the best trucks that I’ve ever driven. Not because of its incredible off-road potential or fantastic acceleration – but because of all the on-board toys to play with. I’m talking about computers, satellite navigation (presumably in case a plane crashes off the airfield and there isn't a telltale trail of smoke to follow), flashing lights and even a siren. But best of all was of course the roof-mounted water cannon – which could even be used while on the move.
Can you imagine how great it would be to have one of these on your own vehicle?
So Mr BMW driver, are you going to get off your mobile phone or what?

More on Scania-MAN-VW.

The latest salvo to be fired in this increasingly bizarre M&A battle is the request made by Volkswagen AG to the German regulatory authorities to bump up its stake in MAN to as much as 30 per cent. "Strings for MAN's takeover attempt of Scania are being pulled in Wolfsburg," said Richard Schramm at HSBC, adding that Volkswagen has said it is aiming for a 25 percent plus one share stake in MAN.

There’s no shortage of news coming out of Iran at the moment. As previously noted, whilst DaimlerChrysler’s feet seem to be cooling down, Volvo – through its deal with Saipa Diesel – is pushing locally built trucks into both the Middle East and Africa, in a 2000 truck deal valued at €130 million.

Now comes the news that Russian automaker GAZ – LDV’s new owner – has signed a $250m deal with Iran Khodro Diesel, which will see the establishment of an Iranian production facility for a new version of the Gazelle van.

Auto Africa 2006 saw the latest push by Tata Motors in order to get a piece of the fast growing South African CV market. Tata is currently the leading player in the two, four and eight tonne and tipper sector and comes in second in the medium commercial vehicles segment.

The storm clouds continue to gather over the US Class 8 market. With a downturn of some 40 per cent expected following the transition to EPA 07, the cutbacks have now begun in earnest.

In the past fortnight, Volvo has laid off over 1000 staff at two plants. First to go were 450 workers at its truck assembly plant in Macungie, Pa., a workforce reduction of around 40 percent. This news has now been followed by the announcement that it will lay off 600 staff – around a third of the workforce - next year at its Hagerstown, Md. engine-and-transmission plant.

Quoted in US trade publication The Trucker Sten-Ake Aronsson, senior vice president of Volvo Powertrain North America said: "While these reductions are necessary for the responsible management of our operations through the downturn, we regret the impact they will have on our employees, their families, and the Washington County community."

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Navistar has chosen Huntsville, Alabama as the site for its Big Bore engine assembly plant.

Known in Europe as MAN’s D20 EGR unit, the Big Bore will be partially built up at an MAN facility in Europe, and then dressed for NAFTA customers at the new plant. Full production will begin during the first quarter of 2008, and the new facility will add 175 staff to Navistar’s existing Huntsville operation, which produces engines for both International and Ford-branded trucks.

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According to this report from Der Spiegel, quoted in Forbes via AFX, Chrysler’s future is now far from certain.

Speculation on Chrysler's future has been rife ever since CFO Bodo Uebber, who, when asked by analysts during DC’s Q3 results press conference to state categorically whether there are plans to sell Chrysler, refused to do provide a direct answer.

Quoting an un-named board member who is reported to have said: 'We would be irresponsible if we did not draw up exit scenarios,” Der Spiegel makes the point that this is the clearest indication yet that Chrysler may well be sold off.

According to the report, two main scenarios are being examined. Chrysler could be floated separately on an as yet un-named stock exchange, or – and we think this is the more likely route – another carmaker could be offered some of the DC Chrysler stake. It would then be allowed to produce vehicle cars at some of Chrysler's manufacturing facilities in the US.

Der Spiegel mentions Volkswagen as a possible partner for Chrysler – but we’d like to know from where VW would raise the cash. Its dalliance with the truck industry cannot be proving cheap, and its restructuring costs in Europe put a big dent in its figures for the third quarter.

But – as an outside bet – how about Chinese OEM Chery? Dieter Zetsche has been chatting to a number of potential partners in his pursuit of a small car deal, and such a deal could kill two birds with but a single stone.

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