Caterpillar Exiting On-Road Engine Business; Entering Strategic Alliance with Navistar
12 June 2008
Caterpillar Inc. is entering a strategic alliance with Navistar International and will exit the on-road engine business. The two companies have signed a Memorandum of Understanding (MoU) to pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms. The two companies intend to focus on global truck opportunities, including North American severe service construction trucks, as well as technology development for engines worldwide.
Through this alliance, Caterpillar plans to target a 2010 introduction of a North American Cat branded heavy-duty truck. Concurrent with this new strategic direction, Caterpillar has determined independently that it will not supply EPA 2010 compliant engines to truck and other on-highway original equipment manufacturers (OEMs).
Caterpillar and its dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand.
In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines in the total contribution of our global engine profitability. Our global power systems business has grown significantly—in fact we supply approximately 400,000 diesel engines annually outside of the on-highway truck market. We intend to remain the world leader in clean diesel engines, and this collaboration is a key enabler.—Douglas R. Oberhelman, Caterpillar Group President
The companies, which have commissioned teams to focus on the truck and engine opportunities, intend to work together to develop, manufacture and distribute commercial trucks in select regions outside of North America. The product offering would include a full line of medium and heavy-duty trucks in both conventional and cab over designs.
Under the alliance, Caterpillar and Navistar plan to cooperate on engine development, incorporating technologies from both companies. Caterpillar and Navistar intend to work together on development of mid-range engines for diesel applications, such as school buses and utility trucks. This engine development would support each company’s stated path not to utilize urea-based Selective Catalytic Reduction (SCR) technology.
There are many opportunities for technology sharing and development that would result in the ability to better meet the worldwide demand for diesel engines in both on and off-highway applications.—Jack Allen, President, Navistar Engine Group
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