Traton is expected to be ready to list in the second half of this year on the Frankfurt stock exchange.

Volkswagen said it plans to build a major global truck business to challenge Daimler (made up of Mercedes-Benz, Freightliner, Western Star, Detroit Diesel, Thomas, Setra and Fuso) and Volvo (comprising Volvo, Mack, Renault, UD and Nova).

Traton also has a link to US truck-maker Navistar in which Volkswagen owns 16.85 per cent.

Coinciding with the IPO news, the company also announced a $1 billion investment in an electric vehicle battery plant to be built in Europe.

Traton is performing well in the lead-up to the listing and recently reported that global sales had climbed 7.4 per cent for the first quarter of 2019 compared with the same period in 2018.

In fiscal year 2018, Traton SE significantly increased its sales revenue and operating profit.

Sales revenue rose by six per cent to $A42 billion across all brands. The company’s adjusted operating profit increased by about 13 per cent to about $A2.8 billion.

Traton SE CEO Andreas Renschler, who is a member of Volkswagen AG’s board of management, said: “We remain right on track to become a global champion. As a group of strong brands, we create success for our customers and tap synergies together. We are ready to take the next steps.”

In June last year, Volkswagen Truck & Bus announced it would change its name to Traton Group with the shift attributed to “reflect a younger outlook for the company” and to establish itself as a player in changes to the transport industry.

Mr Renschler said Traton would give the group more independence from Volkswagen and “strengthen our group’s joint identity and uniqueness”.

He said it would also be able to attract bigger freight volumes, higher emission standards and customer demand for competitive solutions.

By Neil Dowling