CAT Navistar Truck JV a Logical Deal

Implications: Navistar has produced vehicles for one of its major medium duty competitors for several years.  The new JV with CAT is a logical next step.  First came medium truck manufacturing in Escobedo Mexico for Ford a few years ago.  Then came the announcement last year for Navistar production of Chevy and GMC medium duty trucks in Springfield, Ohio.  Now Navistar production of CAT branded trucks.  This is an excellent synergistic move for CAT and Navistar which will bear significant long term benefits for both companies. 

Analysis: CAT will immediately gain a line of on-off road vehicles to complement its global line of construction off-road vehicles with the opportunity to provide specialized vehicles to serve CAT's global customer base.  Navistar will gain a new market through CAT's well established global product distribution system.  Navistar can use this opportunity to populate China with Navistar manufactured vehicles through CAT's well established Chinese product distribution network.  Navistar has the opportunity through future expansion of the of the JV to extablish a manufacturing beachhead in China by lunching off CAT's well established Chinese plants to produce its own line of truck engines, medium duty and heavy duty trucks.  The benefits of this JV will be of significant long-term value for CAT and equally benefit Navistar.