Already a Bloomberg.com user?
Sign in with the same account.
LISLE, Ill. (AP) — Navistar International Corp. said Monday that it reached long-term supply agreements that will allow the company to put Cummins Inc. engines in some of its largest trucks, as well as use its emissions-reducing technology.
Financial terms were not disclosed.
The deal is good news for Navistar, which has struggled this year amid uncertainty about whether its Class 8 engine, used in the largest commercial trucks, would get approval from the Environmental Protection Agency.
The company said in July that it was in talks with the EPA on a plan that would allow it to continue shipping trucks while it makes a transition to a new emission-reducing technology that will bring it into compliance with EPA requirements. It said at that time that the new technology was expected to be available beginning early next year.
Under the terms of the agreements, Navistar will offer the Cummins ISX15 engine in its International ProStar+, PayStar and 9900 truck models. The Lisle, Ill.-based company also will get to use Cummins' emission solutions aftertreatment system for its heavy-duty big bore engines.
Navistar said that over the past several months, engineering teams from both companies have been working to integrate vehicle, engine, and emissions aftertreatment systems. With a formal deal in place, the launch can now go ahead, the company said.
Navistar will start pilot production of International ProStar+ trucks with the Cummins ISX15 in November, with first customer shipments set for the next month. The company will start pilot production of International ProStar+ with Cummins' MaxxForce 13 engine and the aftertreatment system in March, with regular production to follow a month later.
The rest of Navistar's heavy-duty truck models will transition to Cummins' engine technology throughout 2013 based on volume and customer demand, the company said.
While it transitions to the Cummins engines and technology, Navistar said it will continue to build and ship EPA-compliant trucks in all vehicle classes using combinations of earned emissions credits and non-conformance penalties.
Navistar shares rose 45 cents, or 2.4 percent, to $19.49 in afternoon trading, while Cummins shares added 92 cents to $92.85.