Navistar signs deal with CAT rival

Tootoo.com has learned that Navistar International Corp., the U.S. truck maker, has signed an exclusive deal with Cummins Engine Co. to power its largest vehicles in 2010. Dan Ustian, Navistar's chairman and chief executive officer, revealed the new pact on a conference call after the company had earlier outlined a planned new truck alliance with Caterpillar Inc. Caterpillar and Cummins both supply engines to Navistar, though the twin announcements are likely to see a switch in the mix between the two manufacturers. Ustian said Cummins will be the exclusive supplier of 15-liter engines for Navistar trucks, but Navistar will use its own MaxxForce power plant for 13-liter vehicles, including the new line it plans to develop with Caterpillar starting in 2010. He said Cummins currently supplied 75% of Navistar's engines, with Caterpillar providing 25%. Beginning in 2010, he expected Navistar's sales to be split roughly evenly between 13-liter and 15-liter vehicles. Navistar and Caterpillar have not provided sales targets for the new truck they plan to produce under the memorandum of understanding outlined Thursday. Ustan said he expected a deal to be formalized within six months that would see Navistar design and build the new vehicles, "tweaked" from its Prostar platform to meet Caterpillar specifications. China was likely to be the first market targeted for the vehicle, though it would not be distributed in India because of an existing partnership between Navistar and Mahindra & Mahindra Ltd. Ustian said Navistar had examined other potential partners, but said Caterpillar provided the best fit in providing access to international markets where it lacked brand awareness.