Fiat group company Iveco’s interest in American truck major Navistar may include Indian partner Tata Motors - reports Indian newspaper, The Economic Times. According to sources, Tatas are said to be interested, though the process is at a very initial stage. Meanwhile, Navistar’s Indian joint venture with Mahindra & Mahindra contains a ‘decoupling clause’ that gives the Indian partner immunity in case of a buyout or management change.

When contacted, a Tata Motors spokesperson said: “Tata Motors would not like to comment on such speculation.” Marco Monticelli, VP (external relations and communication) at Iveco, confirmed what CEO Paolo Monferino has already said that the company may consider a partial alliance next year in North America. He also added that Iveco is “at the very beginning of a long lasting process”.

International media outlets have reported that Iveco is serious about a partial tie-up or partnership with Navistar for a larger footprint in the American market. Sources say it is not the only one wooing the company and German truck maker MAN is also in the fray.

Navistar has a 51:49 JV with Mahindra & Mahindra in India through subsidiary International Truck and Engine Corporation (ITEC). The JV is putting up a Rs 300-400 crore, 250,000 units per annum plant in Maharashtra which will start production by 2009. The two companies had announced earlier this year that the JV will export vehicles through its own distribution channel, as well as international and M&M’s overseas networks. According to M&M president-auto division Pawan Goenka, “In any alliance that we do, we guard each other’s interest in case the company management is taken over by a direct competitor.” Sources, however, say M&M’s contract with ITEC includes a decoupling clause that would protect the partners in case of an acquisition or takeover by a rival.
 

Unlike Mahindra Renault, where the JV centres around a product from Renault and is dependent on its technology, here the products in the pipeline will be developed jointly by M&M and ITEC as part of the JV. “So a management change may not mean the JV wrapping up,” said a source.

The Chicago-based Navistar International has been the source of much speculation but there have been no confirmations from Iveco before now. Meanwhile there are reports in the international press that MAN may either go it alone or even team up with Iveco for a share of Navistar given its attempt to takeover Swedish truckmaker Scania has come unstuck. Both Iveco and Navistar are medium truckmakers. Apart from the product fit, Navistar has been in the news for its accounting troubles lately.

The company has hired a battery of accountants and consultants who are working on restating its financial accounts from 2003 to the third quarter of 2005. The process is expected to be wrapped up by early 2008. This, along with the fact that new emission norms are likely to push the US truck market into a period of degrowth are both reasons why Navistar is being courted by players which are looking for a larger American presence, say sources.

Tata Motors and Iveco announced their partnership early this year with an agreement to look into cooperation, across markets and in areas like engineering, manufacturing, sourcing and distribution of products.

Report courtesy of The Economic Times, India