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Merc buys Ford heavies

27th February 1997
Page 19
Page 19, 27th February 1997 — Merc buys Ford heavies
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by Steve Sturgess and John Kendall • Ford has sold its entire US heavy truck business to Mercedes-Benz subsidiary and US market leader Freightliner. The deal comes less than two years after Ford launched its HN80 Aeromax/Louisville heavy truck range (CM 6-12 July 1995).

Included in the sale are the HN80, Ford Cargo, Ford's parts business and all remaining tooling from the HN80's L-Series predecessor.

The Cargo is the original model developed in the UK and phased out in Europe in the early 1990s. Ford had planned to discontinue the model in the US but it will now remain in production.

As Mercedes-Benz is due to launch the Actros I.KN range in Europe later this year, it could base a replacement for the Cargo on the European model. The lighter Actros range will replace the current LN2 model, which covers the 814-1320 model range in the UK.

US Ford dealers will continue to sell the ex-Ford trucks but they will be sold under a new brand name and kept distinct from the Freightliner nameplate and dealer network.

However, the Ford trucks will now be sourced from Freightliner manufacturing sites backed by the company's sales, marketing, parts and service systems.

This could have implications for another UK company. Currently, Aeromax body panels are stamped by Mayflower Vehicle Systems (formerly Motor Panels) at its US plant. For Ford, the sale allows for a cleanout at its Louisville, Kentucky truck plant—according to Freightliner chief executive Jim Hebe, heavy trucks account for 10% of the plant's production but occupy 40% of the space.

He also believes that the two companies' product ranges are complementary.

Of last year's production, 89% of Freightliners were sleeper cabbed, compared with only 20% of Fords. Freightliner is strongest in the long-haul truck sector. while Ford has scored well in the oil delivery, tanker, snowplough, municipal and construction sectors.

According to Ford's US sales and marketing heavy truck manager John Merrifield: "The deal has been a very short time in the making and we are the ones that instituted the contact" Wall Street analysts are saying the price could be as little as £122m ($200m), compared with £305m ($500m) in developing the Aeromax, tested by CM two months ago (CM 12-18 December 1996).

If US Government anti-trust scrutineers give the sale the goahead, it will give Freightliner more than 40% of the US heavy truck market.

Ford's withdrawal from that market on its home territory is unlikely to affect the current Iveco Ford deal in the UK, as Ford has no manufacturing involvement in the company.

The Iveco Ford agreement ends in 2003, when Ford can either decide to pull out of the company altogether, or renew the Iveco association.


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