Caterpillar, Navistar finalize alliance

Caterpillar Inc. and Navistar International Corp. announced Monday, April 6, that they had signed a definitive agreement to produce Caterpillar heavy-duty vocational trucks for sale in North America and had formed a 50/50 joint venture to pursue commercial truck opportunities outside of North America and India. The agreement finalizes a planned alliance announced in June 2008.

The new Caterpillar trucks, to be unveiled in late 2010, will be co-developed by Caterpillar and Navistar and built at Navistar’s facility in Garland, Texas. The trucks will be sold and serviced exclusively through the Caterpillar North American dealer network.

“The heavy-duty vocational trucks will be purpose-built to complement Caterpillar’s existing product line and will give Caterpillar dealers an unmatched ability to support customer needs from extraction through delivery,” said George Taylor, director and general manager of the Caterpillar Global On-Highway Department.

The North American truck deal is subject to various closing conditions, including the execution of the related strategic alliance agreement and certain other ancillary agreements, the companies said.

The new Caterpillar trucks are expected to go into production in early 2011 – a timeframe that parallels the expected availability of Navistar’s MaxxForce 15 engine, for which Caterpillar will supply blocks, cranks, heads and other foundation components. Caterpillar announced in June 2008 — simultaneous with the initial announcement of the Navistar strategic alliance — that it will not market its own on-highway heavy-duty diesel engine once the next round of emissions regulations kick in Jan. 1, 2010.

Under the global joint venture, Caterpillar and Navistar will assess individual markets for the development, manufacturing and distribution of commercial trucks, starting with Australia, Brazil, China, Russia, South Africa and Turkey. The companies expect to market both aerodynamic conventional and cabover designs that will be sold under both the Caterpillar and International brands. The first products are expected to be available as early as the third quarter of 2009.

“We believe this clearly is an opportunity where the whole is greater than the sum of the parts,” said Dee Kapur, president of the Navistar Truck Group. “While Cat and Navistar do not compete in our core businesses, each brings distinctive capabilities to the table and have common goals to expand the base of engine, truck and equipment customers worldwide.”

The joint venture is subject to receipt of various regulatory approvals and other closing conditions, including the execution of the related joint venture operating agreement and other ancillary agreements. Following closing, a leadership team and board of directors comprised of both Caterpillar and Navistar representatives will be named.