Published in Breaking News

Spartan Motors opts out of USPS delivery vehicle prototype program

BY Tuesday, February 21, 2017 01:53pm

CHARLOTTE — Citing financial constraints, heavy-duty vehicle manufacturer Spartan Motors Inc. has ceased its development of the next-generation delivery vehicle for the United States Postal Service.

Charlotte-based Spartan Motors (Nasdaq: SPAR) was selected by the Postal Service in September 2016 as one of six heavy-duty vehicle manufacturers across the country to build prototypes to replace the organization’s aging fleet of delivery vehicles.

While Spartan Motors planned on manufacturing its version of the prototype under its Utilimaster brand, the company recently announced it would pull out of the project, citing its “inability to reach a satisfactory agreement with our commercial chassis supplier,” President and CEO Daryl Adams said in a statement.

Adams added that in light of the company’s trouble sourcing chassis, the project no longer met Spartan Motor’s “baseline financial targets.”

Instead, the company plans to partner with another unnamed manufacturer involved in the project to produce interior and cargo components.

“Working closely with one of the USPS prototype award participants will enable us to participate in this significant (next generation delivery vehicle) program without the related upfront developmental capital requirement, while building what we're best at for the fleet market – custom interior cargo management solutions,” Adams said in the statement.

AM General LLC, Karsan, Mahindra Group, Oshkosh Corp. and VT Hackney Inc. were also awarded the Postal Service contract.

It remains unclear what the company will do with the $3.6 million it received from the Postal Service to support the prototype project.

When Spartan Motors first announced its participation in the project, company executives saw it as a step in the right direction after the company struggled with profitability in previous years, according to an MiBiz report published at the time. 

All told, the Postal Service planned to purchase up to 180,000 delivery vehicles ranging in price from $25,000 to $35,000. The overall contract was worth $6.3 billion, according to reports.

[Related: U.S. Postal Service prototype contract could aid Spartan Motor’s profitability]

Adams was not available for comment at the time this story went to press.

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