Mahindra buys Navistar’s stake in the JV

Way back in 2005 Mahindra & Mahindra, along with Navistar International Corporation, joined hands and launched the Mahindra Navistar Automobiles Limited (MNAL) which was followed by another joint venture which gave birth to the Mahindra Navistar Engines Pvt. Ltd.(MNEPL) The JVs were formed to manufacture light, medium and heavy commercial vehicles in India but even the combined investment of Rs.1060 crores did not improve the company’s returns and the American company hence decided to pull away from the JV.

Mahindra has now bought out Navistar’s 49% stake in MNAL for a sum of Rs.175 crore which has made them the sole owner of MNAL as well as MNEPL. Mahindra will be supported by the Navistar group as a licence agreement will allow for business continuity. Apart from that Navistar will continue to source components from India and Mahindra will continue providing engineering expertise to Navistar.

Mahindra Navistar has so far invested over Rs.800 crores on new products and engines for the Indian market and an additional Rs.250 crores investment has been lined up for the next 12-18 months. Having sold 3,500 trucks this year, the company will challenge the likes of Tata Motors and Ashok Leyland and try to sell 40,000-50,000 trucks in the next four years.