Dana transaction means access to South American CV market

user-gravatar Headshot

Dana Holding Corp. announced that it has taken action to become a full-service provider of driveline systems in the growing South American commercial vehicle business via a strategic transaction with Sifco S.A., a producer of steer axles and forged components in South America.

Dana says the agreement enables it to add truck and bus steer axles to its product offering in South America and effectively positions the company as a leading full-line supplier of commercial vehicle drivelines – including front and rear axles, driveshafts and suspension components – in that market. Dana says the transaction is consistent with its emerging market strategy and addresses strong customer demand for a complete driveline product offering in the region.

Dana says its investment of $150 million to acquire the rights to the business is expected to generate $350 million in annual revenue, taking its 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.

Dana says that together with the recent investment announcement in China for its DDAC joint venture, this next step in its strategy implementation further reinforces the company’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,” says Mark Wallace, president of the Dana Heavy Vehicle Products Group. “We’re pleased to support a wide range of multinational 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 now is 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 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,” says Harro Burmann, president of Dana’s South American operations. “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.”