What will be regarded as headline positive for Navistar is the recent news that it has turned to Cummins for the supply not only of its after-treatment system to the soon-to-be combined SCR-EGR MaxxForce engine, but also for the supply of its ISX 15-litre engine for use in a number of Navistar models.
Significantly, no commercial deal has yet been reached. Navistar and Cummins have signed a Memorandum of Understanding (MoU) to explore a possible supply agreement, but, as evidenced by the Tata-Iveco MoU of a couple of years ago, a MoU is no guarantee of a final deal. Should this MoU lead to a deal, this could raise doubts about the future of the oft cited but rarely sighted Caterpillar-supplied MaxxForce 15 engine, and leading to more questions about the sustainability of Navistar’s relationship with CAT.
Should this MoU lead to a deal, this could raise doubts about the future of the oft cited but rarely sighted Caterpillar-supplied MaxxForce 15 engine
Less positive, however, is the news that Navistar, in a regulatory filing dated 21 June, received an informal inquiry from the Chicago Office of the Enforcement Division of the SEC seeking a number of categories of documents for the period of 1 November 2010 through to the present relating to various accounting and disclosure issues. Navistar has said that it is co-operating with the SEC’s inquiry, and added that on 16 July, pursuant to a formal order of private investigation, it received a subpoena from the SEC requesting the same categories of documents sought via the informal inquiry.
The recent decision by the US Court of Appeals for the District of Columbia Circuit to overturn the EPA’s interim final rule on the use of non-conformance penalties has led to a number of strategy reversals for Navistar. Having previously rejected SCR, Navistar is now to offer SCR; and having pursued the notion of a proprietary driveline, it looks likely to offer the Cummins ISX engine in North America.
The recent decision by the US Court of Appeals for the District of Columbia Circuit to overturn the EPA’s interim final rule on the use of non-conformance penalties has led to a number of strategy reversals for Navistar
But what about Cummins? Many of Cummins’ customers – Navistar’s competitors – are pursuing verticalisation: could partnering with Navistar see Cummins closed out of other opportunities as competing OEMs seize the opportunity to complete the journey to a verticalised driveline?
There has been an air of inevitability about this process for some time. Navistar needs Cummins far more than vice versa at present – but what will the future hold for the potential agreement?
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Oliver Dixon is Editor, World Truck Analysis.
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