REPORT: GM mulling sale of MD business to Navistar

DETROIT — General Motors is reportedly considering selling its medium-duty operation to Navistar, whose International Truck and Engine division is the North American market share leader in class 6 and 7 trucks.

According to the Flint (Mich) Journal, quoting an unnamed United Auto Workers official, the two companies are in ongoing talks about the MD division. Plant workers also told the paper that Navistar execs have been seen recently in GM’s Flint plant, where the vehicle maker produces its medium-range trucks.

Both Navistar International and GM are declining to comment on the published report.

GM’s Kodiak would fit in well with Navistar’s
lighter midrange lineup, says Bear Stearns.

GM has a modest slice of the medium-duty truck market. Its brands in that class are the Kodiak, TopKick and Isuzu T-Series.

Such a deal could help Navistar prepare for “life after Ford,” writes industry analyst Peter Nesvold of Bear Stearns in a note to investors.

Ford is currently Navistar’s largest customer, but the two companies have been locked in a bitter dispute over the supply of Navistar’s Power Stroke diesel engines. Navistar, which halted shipment of the engines until it was ordered to continue supplying Ford by a Michigan court, recently filed a counter suit against the carmaker, alleging Ford is in breach of contract.

If a sale were to occur, speculates Nesvold, production might be moved to another Navistar facility and workers on the GM line would be absorbed into other GM divisions.

He says the move could work out well for both companies as it would improve capacity utilization at GM (which wants to focus more on cars and light trucks), plus remove a mid-range competitor for the latter.

Nesvold added that he doesn’t think Navistar would replace the Duramax 6.6L diesel with its own 6.4L engine. But there could be an opportunity for the truckmaker to sell larger displacement engines into GM eventually.

— with files from the Flint Journal