Penske to return to Australian trucking

US CAR and truck giant Penske is poised to return to Australia after more than a decade, announcing plans to take over the Western Star distribution business for about $220 million.

The deal, which will see Penske take over the Western Star business from current owner Transpacific Industries Group, is expected to be worth up to $500 million in revenue a year, the company says.

The deal is expected to be completed within the next couple of months pending approval from businesses tied in with Transpacific, as well as other conditions.

The deal will give Penske a foothold in Australia’s booming truck and bus market, picking up the rights to heavy- and medium-duty trucks for Daimler subsidiary Western Star, the Volkswagen Group-backed bus supplier MAN, and garbage-truck brand Dennis Eagle.

Combined, the three brands accounted for more than 1500 sales in Australia last year.

Penske spokesman Anthony Pordon said the company has had a foothold in Australia before.

“(Roger) Penske and our management team owned and operated Detroit Diesel from 1988 to 2000,” he told GoAuto shortly after the deal was announced.

“We believe we understand the market and the customers,” Mr Pordon said.

“The business we intend to acquire imports the vehicles from other countries and then distributes them through an exclusive dealership network around Australia and New Zealand which includes over 80 dealers. We will also distribute spare parts.

“We believe it’s a growing market and we have exclusive distribution of the Western Star, MAN and Dennis Eagle vehicles.”

Penske chairman Roger Penske said the Western Star business provided the company with an “attractive gateway” to enhance its global business profile.

"Strong market dynamics, multiple growth options and one of the largest and well-established dealer networks in Australia and New Zealand enhance the business opportunity,” he said.

“We believe that our existing relationships with heavy and medium-duty truck manufacturers and our experience in operating distribution and dealership-related businesses provide us with a unique opportunity to expand our business while potentially providing a stepping stone to South-east Asian markets for other parts of our business."Penske said Western Star Trucks had a “seasoned local management team, which is expected to provide a seamless transition” under the US company’s stewardship.

Australia’s truck market has experienced strong growth in the last five years, according to Australian Bureau of Statistics motor vehicle census data.

The most recent data, released last month, shows there are growing numbers of big trucks on Australian roads, with registrations of vehicles that can carry more than 20 tonnes growing by almost 20 per cent over the past five years.

While the number of trucks that can carry up to 40 tonnes has fallen 15 per cent, it was offset by a 22 per cent jump in the number of trucks able to haul 60 to 100 tonnes.

Meanwhile, the number of trucks able to lug more than 100 tonnes has grown by more than 50 per cent.