Dana Holding Corp. has taken action to become a full-service provider of driveline systems in the growing South American commercial vehicle business.
The company completed a strategic transaction with SIFCO S.A., a leading producer of steer axles and forged components in South America. The agreement enables Dana to add truck and bus steer axles to its product offering in South America and effectively positions the company as the leading full-line supplier of commercial vehicle drivelines – including front and rear axles, drive shafts, and suspension components.
The transaction is consistent with Dana's emerging market strategy and addresses strong customer demand for a complete driveline product offering in the region. Together with the recent investment announcement in China for its DDAC joint venture, this next step in its strategy implementation further reinforces Dana's total commitment to support customers in the global truck market.
"This agreement builds on Dana's deep manufacturing and engineering expertise in this product segment and immediately positions Dana as the leading provider of full system driveline solutions to our customers, allowing us to develop total vehicle optimized solutions in South America," said Mark Wallace, president of the Dana Heavy Vehicle Products Group. "We're pleased to support a wide range of multi-national and regional commercial vehicle manufacturers in this region with what we believe are world-class products and capabilities."
Under the agreement, Dana acquired the distribution rights of commercial vehicle steer axle systems and is now responsible for all customer relationships, including marketing, sales, engineering, and assembly. Key customers in the Brazilian commercial vehicle market include Agrale, Ford, Iveco, MAN, Mercedes Benz, Scania, and Volvo.
Dana obtained an exclusive, long-term supply agreement with SIFCO to ensure supply of key components in the systems – specifically I-beams, steer arms, and knuckles. In addition, SIFCO will provide selected assets and assistance to Dana to establish, in the near term, assembly capabilities for these systems.
Dana's investment of $150 million to acquire the rights to the business is expected to generate $350 million in annual revenue, taking Dana's total annual revenue in South America to more than $1 billion and positioning the company for further growth in the region. Total units sales of commercial vehicles in Brazil totaled 248,000 in 2010. The financial impact of the transaction will be recorded in the first quarter of 2011.
Harro Burmann, president of Dana's South American operations, added: "Dana's long track record of experience in this product segment, combined with the strength of SIFCO, will enable us to continue creating benefits for our customers. Our supply agreement with SIFCO – with its longstanding experience in forged components – further supports our strong belief that we can deliver driveline solutions of greater value to this market."