Bloomberg News

Bendix Brake Defect Leads to Lower Navistar Forecast

February 02, 2012

(Corrects name of company in first paragraph.)

Feb. 1 (Bloomberg) -- Bendix Commercial Vehicle Systems LLC said it stopped shipping defective truck-brake parts that Navistar International Corp. told investors today will contribute to a first-quarter loss.

The company, a unit of closely held Knorr-Bremse Group AG, said it told customers last month to stop shipping trucks with its brake component because they may leak in cold temperatures, causing the brakes to be applied involuntarily. No injuries have been reported, the partnership said in a statement on its website.

A valve that helps with traction and stability control may leak when temperatures drop below 0 degrees Fahrenheit (-18 degrees Celsius), the Elyria, Ohio-based company said.

Navistar, based in Lisle, Illinois, said today it expects to report a loss for the quarter ended yesterday, in part because of the brake issue. Analysts estimated profit of 27 cents a share, the average of 14 estimates in a Bloomberg survey. The partnership’s other customers include Volvo AB, according to a customer list on the supplier’s website.

The Illinois-based maker of heavy-duty trucks halted some shipments starting about Jan. 20, Jack Allen, president of Navistar’s North America truck group, said at an analyst conference. It is repairing the brakes on affected vehicles yet to ship and ones already in use, he said.

“It doesn’t affect everybody in our industry and it doesn’t even affect all of our products, but it’s a serious issue,” said Allen, who didn’t name the supplier. “As a result we haven’t shipped a whole lot trucks since Jan. 20.” He said shipments may be held up until the second or third week of February and that the company expects to recover sales volume in 2012.

Navistar declined to comment further.

--Editors: Jamie Butters, John Lear.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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