Navistar Has Plan To Counter Losing EGR Gamble

Jack Roberts August 23, 2012

Navistar says it is hitting the “reset” button.

After years spent developing and marketing its own engine platform, a series of negative turns this year resulted in an about-face on Navistar’s engine technology and a nosedive in its stock price. Now, executives say, they are charging ahead with a new engine strategy and a plan to restore customers’ and investors’ confidence in Navistar’s products and return the company to profitability.

“We really feel like our competitors are telling our story instead of us, and we want to change that,” said Jack Allen, North American Truck Group president for Navistar, during a meeting last month at Navistar’s headquarters in Lisle, Ill., with editors from Randall-Reilly Publishing Co., owner of Successful Dealer and Truck Parts & Service magazines.

Allen said the controversial push to meet 2010 emissions standards using an exhaust gas recirculation-only engine, as opposed to one using selective catalytic reduction, was rooted in the pride Navistar takes in understanding its customers. “More than 9,000 fleets went out of business during the economic crash, while government regulations such as HOS (hours of service), CSA (Compliance Safety Accountability) as well as rising fuel prices have created big challenges for them,” he explained. “We really thought an engine without SCR would be a big help to them.”

Every other diesel engine manufacturer ruled out an EGR-only engine as impractical for meeting 2010 standards set by the U.S. Environmental Protection Agency. But Allen said Navistar felt their engineers could develop one, which would give the company a huge advantage for years.

“So we started early back in 2000 building engines that allowed us to stockpile credits because we knew we’d have a race against time on our hands to get to the EPA’s 2010 NOx requirement of .2 grams before those credits expired,” Allen explained. “And it really surprised us how loud our competition screamed about our efforts. They were scared to death.”

In the end, “Our EPA credits ran out before we could get the technology perfected,” he said. “The angst in the marketplace was starting to become overwhelming. So we’re going to move forward.”

As previously announced, that means offering the Cummins ISX15 in International ProStar+ tractors beginning in January, with an EPA-certified MaxxForce 13 – with ICT+ exhaust aftertreatment, Navistar’s SCR technology – appearing in March. Until then, the company will continue to sell EGR-only MaxxForce 13 engines and pay an EPA noncompliance penalty for each one sold. A final EPA ruling as to the amount of the NCPs per engine is expected in 30 to 60 days. The announcement also said that Navistar would adopt a proprietary SCR system based on Cummins’ exhaust aftertreatment systems.
A federal appeals court decision ruled that EPA did not follow proper procedures in assessing NCPs to the MaxxForce 13 engines.

The ruling also said that initial NCPs of $1,200 per engine were insufficient punishment and created an unfair advantage for Navistar over competitive companies that invested in SCR technology.

The court decision intensified the industry spotlight on Navistar’s struggle to develop an EGR-only emissions solution as well as the company’s ability to continue selling noncompliant engines. Additionally, reports of reliability issues with MaxxForce-equipped trucks and questions about the value of MaxxForce-equipped used trucks led to Navistar’s stock price to drop from $47.42 a share in February to $24.75 by mid-August.

Prior to the decision, Navistar’s EGR-only project had devolved into a bitter war of words and lawsuits against competitors, the California Air Resources Board, EPA and even customers as the company struggled to perfect its emissions solutions before EPA credits expired. The fallout left Navistar battered and the North American trucking industry awash with rumors of unreliable engines and angry dealers and customers. Mainstream reporters in recent months questioned the company’s long-term cash-flow situation and viability and reported on shareholder efforts to remove top Navistar officials. There has been speculation that an acquisition by foreign automakers or full-blown bankruptcy are likely outcomes.

View this article on one page


Do you actively capture and use customer data?


Registration now open for CVOC

Rush Enterprises quarterly income soars

M&K Truck Centers breaks ground on new location


Caterpillar engine lawsuits consolidated, new suits continue to be filed

Rush Enterprises quarterly income soars

Successful Dealer Award finalist: Truck Centers, Inc.

Successful Dealer Award

Click here to read about the award and see the nominees for this year's award.