Navistar's Intentions

[Bob Rosadini]

M-D Suppliers to Consolidate, Executive Says

 

 

By Light & Medium Truck

 

 

The medium-duty truck sector cannot support all of the current manufacturers and the industry will lose another brand soon, said James L. Hebe, senior vice president for North American sales operations with Navistar Inc.

 

 

 

Speaking at the American Truck Dealers’ annual conference, Hebe said that there are too many “niche players” in the medium-duty sector for the number of trucks sold and some of the current original equipment manufacturers won’t last through the recession. Full-line, vertically-integrated manufacturers, such as Navistar and Freightliner Trucks, which supply their own trucks and engines, as well as buses and vocational trucks, “will take over.”

 

 

 

“We will be a smaller industry. Sterling will not be the last to go,” Hebe said, referencing Daimler Trucks North America’s decision to discontinue the Sterling Trucks brand.

 

 

 

Hebe was president of Freightliner Trucks in 1997 when the company bought Ford Motor Co.’s heavy-duty truck line and renamed it Sterling.

 

 

 

“There is no room for niche suppliers,” he told Light & Medium Truck after the address, although he did not identify any manufacturer.

 

 

 

Hebe said the medium-duty (Classes 5-7) sector will take much longer to recover from the recession.

 

 

 

Hebe told L&MT that the company’s effort to acquire General Motors’ Fleet and Commercial Operations last year was intended to expand Navistar’s engine business and not “to complete Navistar’s product line.” Hebe said discussions between the two companies were “in deep hibernation.”

 

 

 

Hebe also hinted that Navistar would buy production facilities in the Class 3-5 range but would not provide details.

 

“Hang on,” he said.

 

So check this out. To all you old Ford "Big truck" guys out there, our old friend Hebe speaks again. After taking Ford's corporate pants down in 97 when he engineered the theft of the Ford heavy truck business for a mere 300 million, this guy, now employed by Navistar is predicting that another medium truck producer is going to fold its tent. Who could he be talking about? Let's hope it's GM- that would be obvious right? Then again, as Navistar has castrated Ford with its majority interest in BlueDiamond, and as Hebe is saying they would like to be a player in class 3 to 5., who would they most like to see out of the picture in medium trucks?

 

My guess is the General is toast- don't worry about them. Who knows what Fiat will do to Chrysler? Might the Dodge truck production capacity go up for bid? If that were the case, and with Ford's apparent indifference to medium trucks, could be Navistar will make Bluediamond less and less viable to Ford to the point where the Ford genius marketers will say- "nah, we are not iterested in class 6 and 7, let's get back to our core business".

 

Except when they do, the likes of Hino and Navistar to say nothing of Frieghtliner will be populating that "core" to the point that many buyers will elect to stay with real truck people that can solve all their commercial truck needs.

 

Oh, and to those who say- "well what did Hebe accomplish in 97?- Sterling is now gone!" True-but Daimler effectively took 8 to 10 % of the class 8 competition and probably 15 % of class 6 and 7 effectively out of the picture. That's one way to get market share right?

[7Mary3]

Very interesting! FWIW, I'll give you my take. Hebe is right, there are too many players in the U.S. medium duty market (and I have news for him, there's too many in heavy duty as well!). As we all know, International was after GM's medium duty business. And I think the only real reason was International didn't want Isuzu, GM's long time partner, to get it. World wide, Isuzu is in the top 3 commercial truck manufacturers. They want to expand their presence in the U.S., and GM's dealer network and medium duty conventional line would give them a strong foundation to build on. Isuzu is very much vertically integrated, and GM's mediums now use Isuzu diesels exclusively. The stumbling block in a GM/International deal was GM's Flint plant, which the UAW would have required build another vehicle in the event the mediums were moved to International's Springfield facility. That 'other vehicle' was going to be a second smaller medium duty line to be shared by both GM and International, but it was cancelled due to the economy. Isuzu has stated that if they took over GM's medium duty business, they would keep production at GM's Flint plant. This should come as no surprise, as the Flint plant currently builds many trucks for Isuzu's U.S. dealers. One of the 'niche players' Hebe is referring to may be Mitsubishi Fuso. Their market share is very small, they have dropped their class 6 and 7 models, and they were supposed to be integrated into Sterling in the U.S., as they are part of Daimler. Nissan UD is owned by Volvo AB. I was expecting Volvo to make a run on the medium duty market, but at this point who knows? As for Hino, they are growing, and Toyota has enough money to wait out the shake-up. I don't think the Fiat/Chrysler deal will have any effect on the medium duty market. My guess is Fiat will want to continue the Dodge Ram, including the 4500 and 5500 models, but the Dodge dealer network can't handle anything larger. Paccar will probably stay in, their mediums complement their heavy duty line, and that's not going anywhere. Which leaves us with Blue Diamond. The LCF has been dropped, Ford doesn't seem interested in marketing the trucks, and International has 75% controlling interest. It doesn't look good for Ford at the moment, but it is really hard to say exactly how this will play out. Stay tuned!

[Bob Rosadini]

Very interesting! FWIW, I'll give you my take. Hebe is right, there are too many players in the U.S. medium duty market (and I have news for him, there's too many in heavy duty as well!). As we all know, International was after GM's medium duty business. And I think the only real reason was International didn't want Isuzu, GM's long time partner, to get it. World wide, Isuzu is in the top 3 commercial truck manufacturers. They want to expand their presence in the U.S., and GM's dealer network and medium duty conventional line would give them a strong foundation to build on. Isuzu is very much vertically integrated, and GM's mediums now use Isuzu diesels exclusively. The stumbling block in a GM/International deal was GM's Flint plant, which the UAW would have required build another vehicle in the event the mediums were moved to International's Springfield facility. That 'other vehicle' was going to be a second smaller medium duty line to be shared by both GM and International, but it was cancelled due to the economy. Isuzu has stated that if they took over GM's medium duty business, they would keep production at GM's Flint plant. This should come as no surprise, as the Flint plant currently builds many trucks for Isuzu's U.S. dealers. One of the 'niche players' Hebe is referring to may be Mitsubishi Fuso. Their market share is very small, they have dropped their class 6 and 7 models, and they were supposed to be integrated into Sterling in the U.S., as they are part of Daimler. Nissan UD is owned by Volvo AB. I was expecting Volvo to make a run on the medium duty market, but at this point who knows? As for Hino, they are growing, and Toyota has enough money to wait out the shake-up. I don't think the Fiat/Chrysler deal will have any effect on the medium duty market. My guess is Fiat will want to continue the Dodge Ram, including the 4500 and 5500 models, but the Dodge dealer network can't handle anything larger. Paccar will probably stay in, their mediums complement their heavy duty line, and that's not going anywhere. Which leaves us with Blue Diamond. The LCF has been dropped, Ford doesn't seem interested in marketing the trucks, and International has 75% controlling interest. It doesn't look good for Ford at the moment, but it is really hard to say exactly how this will play out. Stay tuned!

 

All good points. And for sure if you look at the Mitsu and UD numbers they are truly insignificant. I guess my biggest fear is Ford is sending no message what so ever that they are in for sure. As I posted on aother thread. They get all kinds of good opportunities to showcase the brand- or should I say class 6 and 7, and they say and do nothing! They CAN'T be that stupid- it can only mean one thing- the Bluediamond extension is a delaying tactic, their lack of current 650/750 advertising speaks volumes and its a matter of time before we get the old..."in an effort to get back to our core business and focus on the true commercial truck segment (class 3-5) we have elected to discontinue our class 6 and 7 offerings". blah blah. And again, we will see Ford walk away from a segment that they once were leaders in. And to those who say- "yah but they made no money", I say, you better tell Hino, Freigtliner and Navistar they are about to loose their shirts big time. Everytime Ford has "lost money" in my book it was a self fullfilling prophecy.

[Joe771476]

Heavy Duty Trucking April 2009 edition: Isuzu YTD class 7, 18 units; class 6, 15 units! Why in the hell waste their time?! Mitsubishi Fuso, 4 and 9 respectively! Huh?! Nissan, 25 and 21 respectively. But these guys will wait it out and wait for Ford to cave in.

[7Mary3]

Light and Medium Truck has a Ford ad in it that actually has a picture of an F-650! Mind you it is hidden behind an E series van, and there is no mention of medium duty trucks in the text, but oh well.......

[ausrutherford]

Navistar can go screw themselves for what they did to Ford.

[RichardJensen]

Toyota has enough money to wait out the shake-up.

Not necessarily:

 

http://www.financialpost.com/news-sectors/...html?id=1461348

http://www.autoblog.com/2009/03/03/report-...-japanese-govt/

 

Key bit:

 

http://www.autoblog.com/2009/01/26/toyota-...illion-in-cash/

 

With a couple million units in additional volume per year, Toyota's daily operating costs are significantly higher than Ford's, and they have less cash (perhaps) on hand.

[lfeg]

Not necessarily:

 

http://www.financialpost.com/news-sectors/...html?id=1461348

http://www.autoblog.com/2009/03/03/report-...-japanese-govt/

 

Key bit:

 

http://www.autoblog.com/2009/01/26/toyota-...illion-in-cash/

 

With a couple million units in additional volume per year, Toyota's daily operating costs are significantly higher than Ford's, and they have less cash (perhaps) on hand.

 

But they do have the Ministry of Industry and Trade to backstop them. Their new leadership follows the idea that long term thinking is the best way to achieve goals, and the Japanese government does actually have manufacturing and trade policies.

 

Also, I find one of Hinos stratagies interesting. In an region where they are looking for a dealer, they seem to hook up with a body and equipment supplier, and bring them on as a dealer. Makes sense, since more than a few purchasers of vocational trucks consult a body and equipment supplier first to select the body and specialized equpment they need, and then use the info from that to spec the truck chassis. With Hino hooking up with body and equipment dealers they can offer one stop shopping.

[Bob Rosadini]

But they do have the Ministry of Industry and Trade to backstop them. Their new leadership follows the idea that long term thinking is the best way to achieve goals, and the Japanese government does actually have manufacturing and trade policies.

 

Also, I find one of Hinos stratagies interesting. In an region where they are looking for a dealer, they seem to hook up with a body and equipment supplier, and bring them on as a dealer. Makes sense, since more than a few purchasers of vocational trucks consult a body and equipment supplier first to select the body and specialized equpment they need, and then use the info from that to spec the truck chassis. With Hino hooking up with body and equipment dealers they can offer one stop shopping.

Good point on the Hino dealers. Plus the ones they have are very aggressive with their advertising- I would assume there is plenty of co-op ad bucks from Hino. Plus Hino is committed. Big Ford Sterling dealer in Maine, loses their Sterling business. Are they now pushig Fords? Nope- Hino's. Can you blame them?

 

I think we all understand that Ford has to be careful about how they spend their bucks in the next year or so. the danger in trucks though, is once a fleet makes a commitment, its tough to get the business back. If in fact Ford is just marking time in mediums, I hope they don't squander their former class 3-7 leadership position.

[Bob Rosadini]

Not necessarily:

 

http://www.financialpost.com/news-sectors/...html?id=1461348

http://www.autoblog.com/2009/03/03/report-...-japanese-govt/

 

Key bit:

 

http://www.autoblog.com/2009/01/26/toyota-...illion-in-cash/

 

With a couple million units in additional volume per year, Toyota's daily operating costs are significantly higher than Ford's, and they have less cash (perhaps) on hand.

Richard,

That is all very encouraging. But what Toyota is not saddled with, is Obama and his crew of clueless hack politicians

[7Mary3]

..........Also, I find one of Hinos stratagies interesting. In an region where they are looking for a dealer, they seem to hook up with a body and equipment supplier, and bring them on as a dealer. Makes sense, since more than a few purchasers of vocational trucks consult a body and equipment supplier first to select the body and specialized equpment they need, and then use the info from that to spec the truck chassis. With Hino hooking up with body and equipment dealers they can offer one stop shopping.

 

That's a very good point. I see a number of upfitters aligning themselves with a particular dealer and truck manufacturer, and selling finished vocational trucks 'turn key'. A lot of fleets are going for this, it basically saves them the step of having to find a chassis and then working with an upfitter. This trend is particularly popular with some of the municipal and public utility fleets, where the upfitter is designing specialized equipment to fit a particular chassis.

[Joe771476]

So why didn't Ford et al think of this kind of alliance? There are guys at Toyota (Hino) that sit around all day and just think. That's all they do. They ask themselves, "If we do this, then what will happen?" American mfrs. -- and Congress -- need to do the same!

[Bob Rosadini]

Amen! new issue of Equipment Today arrives and there is a big inside cover two page add from Ford Commercial Truck. Shows a 650 Super Cab with a utility body of some sort together with a 150, 350,450, E- series.

 

Probably same add 7M3 referred to- Not bad- unlike the Ford Fleet adds that are pointless and misdirected

[Blue II]

It's too early to write Ford off on the commercial truck market. There are CO units in FOE and FSA that can be fitted with the 4.4 or 3.6 Lion.

[battyr]

But they do have the Ministry of Industry and Trade to backstop them. Their new leadership follows the idea that long term thinking is the best way to achieve goals, and the Japanese government does actually have manufacturing and trade policies.

 

Also, I find one of Hinos stratagies interesting. In an region where they are looking for a dealer, they seem to hook up with a body and equipment supplier, and bring them on as a dealer. Makes sense, since more than a few purchasers of vocational trucks consult a body and equipment supplier first to select the body and specialized equpment they need, and then use the info from that to spec the truck chassis. With Hino hooking up with body and equipment dealers they can offer one stop shopping.

 

The problem is when you have one journalist quoting another journalist and you don't know what the original source is, and you use language like "may be", then you really don't know what the situation is. If I find time, I might look up Toyota's financials. Hopefully they are not to much out of date.

[7Mary3]

It's too early to write Ford off on the commercial truck market. There are CO units in FOE and FSA that can be fitted with the 4.4 or 3.6 Lion.

 

After the failure of the LCF I don't see Ford wanting back in that market anytime soon. Than again, the 4.5L Powerstroke was a big part of that failure......

[battyr]

The problem is when you have one journalist quoting another journalist and you don't know what the original source is, and you use language like "may be", then you really don't know what the situation is. If I find time, I might look up Toyota's financials. Hopefully they are not to much out of date.

 

Here's the scoop on Toyota.

 

Current Assets 11.3 Trillion Yen = $118 Billion US

Total Asset 29.1 T $306 B. US

 

Current Liabilities 10.6 T $111 B. US

Total Liabilities 18.5 T $194 B. US

Share holders Equity 10.1 T $106 B. US

 

Current Asset-Current Liabilities 0.7 T $ 7 B. US

 

Huge numbers. This is not good. The Current Liabilites are way to high. This is short term. They they are responsible to pay back now. Some of it is there line of credit with the bank, but not a large part.

 

I don't understand why the Current numbers are so high. Must have something to do with the Japanese way of doing business. After they pay their current Liabilities they only have a cash surplus of $7 Billion. In todays market they won't be able to borrow much money. If they were smart they would take advantage of their high share value and issue some shares to get some cash reserves.

 

They also have huge Current Assets, but a lot of it can disappear as customers go out of business.

Edited May 13, 2009 by battyr

[Joe771476]

On a positive note, my buddy has some F650 flatbed tow trucks. I just saw him down in Newington CT where I was surprised to see an F750 public works dump truck with (strangely) a snow plow on it! The only time previous to this was two early 90's F-800 4X4's in Middletown CT. I never had seen a municipal class 6-8 F-series dump truck prior to these F-800's AFTER 1971 with the advent of the L-series.

[Bob Rosadini]

After the failure of the LCF I don't see Ford wanting back in that market anytime soon. Than again, the 4.5L Powerstroke was a big part of that failure......

According to a dealer friend of mine, the LCF was a great truck-if it wasn't for the POS 4.5. The Torqueshift trans also did a good job but the engine won't make it past 70,000 or so. He just had a customer run out of warranty and the engine blew- He managed to get the guy a few bucks but no way was it close to the repair.

[Joe771476]

On a side note, I just went to youtube and typed in Lady Antebellum I Run to You -- good song -- and in that video would you believe the bottom half of one truck appears in it 7/8 into the video and it's an F650/750 4 dr.! I mean what are the chances? The average guy wouldn't know it, but I'm sure

7Mary and Bob R. would.

[Bob Rosadini]

On a side note, I just went to youtube and typed in Lady Antebellum I Run to You -- good song -- and in that video would you believe the bottom half of one truck appears in it 7/8 into the video and it's an F650/750 4 dr.! I mean what are the chances? The average guy wouldn't know it, but I'm sure

7Mary and Bob R. would.

Joe well for sure great song- and you have to be paying attention to see the truck! And you are right- three of us would recognize it!

[lfeg]

Interesting item - I watched a little of the Indy 500 on Sunday, Every time I watched there was a yellow, and the hook trucks I saw were Hinos.

[Joe771476]

There's a dealer on Newfield St. in Middletown CT with many Japanese truck brands on the lot. I don't see a dealer name anywhere! But now there are about 40 yellow Hino box trucks and the one that was on the front lot by the road had "Penske" blanked out. I sure would like to know what that's all about.

[Bob Rosadini]

There's a dealer on Newfield St. in Middletown CT with many Japanese truck brands on the lot. I don't see a dealer name anywhere! But now there are about 40 yellow Hino box trucks and the one that was on the front lot by the road had "Penske" blanked out. I sure would like to know what that's all about.

JOE, Just out of curiosity- are they new or used? In any case, Roger Penske has some sort of finacial interest in the Hino truck distribution set up. Penske Truck Leasing also sponsored/orchestrated some fuel economy testing that was done a year or so ago.

[J-150]

Navistar can go screw themselves for what they did to Ford.

 

 

Ford did it to themselves.

 

Navistar are not the only engine builders out there.