LISLE, Ill. — 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 starting next month, as well as use the Columbus-based engine maker’s emissions-reducing technology.
Financial terms were not disclosed.
The deal figures to provide a boost for Cummins’ sales, and it’s 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.
Navistar 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. The companies announced in early August that they had entered into a nonbinding memorandum of understanding.
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.
Cummins’ stock closed at $93.50 per share, up $1.57 per share or 1.7 percent, Monday in New York Stock Exchange trading after the news.
“Cummins is the leading independent manufacturer of diesel engines and an expert in after-treatment technologies. As such, we have many customers who may be considered competitors of each other. Each of our customers is very important to us, and we do what it takes to provide each with high-quality products, service and support,” said Cummins spokesman Jon Mills.
Navistar said that, over the past several months, engineering teams from both companies have been working to integrate vehicle, engine and emissions after-treatment systems. With a formal deal in place, the launch can go ahead, the company said.
Navistar will start pilot production of International Pro
Star+ 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.
Navistar shares rose 81 cents, or 4.25 percent, to $19.85 in afternoon trading, while Cummins shares added 92 cents to $92.85.
The Republic’s Randy McClain contributed to this report.
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