MUMBAI/BANGALORE India's Mahindra & Mahindra (MAHM.NS) will buy Navistar International Corp's (NAV.N) stakes in the automakers' two joint ventures in the country, in a $33 million deal as the troubled U.S. truckmaker looks to dump its underperforming businesses.
Mahindra Navistar, formed in 2005, has struggled to gain a significant foothold in India's competitive commercial vehicles market, where Tata Motors (TAMO.NS) and Ashok Leyland (ASOK.NS) control around 70 percent.
"While the Indian market has not expanded as we had expected and industry challenges there continue in the near term, we still see promise in India going forward," Troy Clarke, president, Navistar, said in a statement on Tuesday.
The joint venture sold 7,904 vehicles in the first eight months of the financial year that began in April, according to data from the Society of Indian Automobile Manufacturers, with a 1.5 percent share of India's commercial vehicle market.
The companies also have a joint venture to manufacture engines in India.
Navistar is cutting costs and weighing asset sales, targeting savings of up to $175 million next year as it looks to turn around its struggling business.
Mahindra & Mahindra is India's largest manufacturer of utility vehicles and SUVs.
The sale requires regulatory approval in India and is expected to be completed early next year. Navistar would continue to source parts from India, it said.
(Reporting by Henry Foy in MUMBAI and Sakhti Prasad in BANGALORE; Editing by Prateek Chatterjee)