Navistar Says It Has 50,000 Orders for Trucks

This story appears in the Jan. 31 print edition of Transport Topics.

An executive with Navistar Inc. said the company has received orders for nearly 50,000 International trucks with its 2010-compliant MaxxForce engines and already has shipped 26,000 of them to customers.

The company also said last week it expects strong earnings for the full fiscal year.

Jack Allen, president of the North American Truck Group, announced that Navistar has received Environmental Protection Agency certification for its new 15-liter MaxxForce engine and soon will submit a 13-liter model that runs under the 2010 nitrogen oxides limit of 0.2 gram per brake horsepower-hour.

Navistar had been using credits built up from selling engines cleaner than previous EPA limits to sell 2010 engines than ran above that limit.

Navistar chose to meet EPA standards to reduce nitrogen oxide emissions in 2010 by upgrading the in-place exhaust gas recirculation systems that most truck manufacturers put into their 2002-2004 engines to meet earlier EPA mandates.

All other producers chose selective catalytic reduction technology, which treats NOx in the aftersystem rather than within the engine, as EGR does.

Allen cited the statistics in a presentation by Navistar‘s executives to investment analysts Jan. 25 at the company’s engine plant in Melrose Park, Ill.

“Our total orders that we’ve received for 2010 engines now total almost 50,000,” Allen said. “We’ve shipped over 26,000 of those today.” He did not break out the figures for heavy-duty and medium-duty engines.

“The MaxxForce 15 is fully certified with the EPA, and it’s in production today in low volumes,” he said. “We’re going forward from a value proposition standpoint, and we’ll ramp that up through the year.”

Allen said the fuel economy of the MaxxForce 13 “is a parity or better than anything in the market.”

During his presentation, Navistar Chairman and CEO Daniel Ustian tweaked SCR proponents for previously criticizing his company’s engine choices.

He said that one reason people assumed that Navistar had made the wrong engine decision was because the other manufacturers had picked a technology designed in Europe.

“It must be Navistar has the problem,” Ustian said of how competitors perceived his company’s decision. “Well, they say, ‘I’ve got European engineers. Everybody knows European engineers are smarter than the North American engineers.’ ”

Since Navistar’s U.S.-designed engines hit the market, he said, “they are delivering actually a little bit better than what we said on fuel economy, durability, the whole thing. So, time is now on our side.”

When analysts had their turn to question the Navistar executives, not one of them asked anything concerning possible problems with Navistar’s 2010 engines.

An analyst who follows Navistar, who asked not to be identified, said Navistar has satisfied them on this point.

“In late 2009 and early 2010, analysts really chewed off the issue [on Navistar’s engines], and once they started to ship, the market was watching really closely,” the analyst told TT.

“But analysts now feel that they have shipped enough engines that they have gained market acceptance . . . especially because the engine has been getting pretty positive reviews by customers and we’ve heard no feedback that there’s anything structurally wrong with them,” the analyst said. “It’s obvious that fleets are buying them. Heartland has bought hundreds of the new ProStars.”

Heartland Express, which ranks No. 46 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada, issued a statement Jan. 11 on its purchase of International’s ProStar over-the-road tractors.

“The company completed the purchase and delivery of 200 new 2011 ProStar Internationals in the fourth quarter and will take delivery of 200 new 2012 ProStar Internationals in the first quarter of 2011,” Heartland said.

Meanwhile, just before the analyst conference, Navistar released a statement on new guidance for its fiscal year.

“Navistar . . .  announced today it expects substantial gains in fiscal 2011 earnings as the result of the successful implementation of its three-pillar growth strategy and improving economic conditions,” the company said.

“Navistar said it believes that net income attributable to Navistar International Corp. for fiscal year ending Oct. 31, 2011, is expected to be between $388 million and $466 million, equal to $5 to $6 diluted earnings per share.”

For fiscal 2010, Navistar reported net income of $223 million, or $3.05 a share, on sales of $12.1 billion.

Navistar also predicted that truck industry retail sales, by all companies, for its fiscal year will climb to 240,000 to 260,000 units, an increase of 10,000 vehicles from its December forecast and up from 191,300 sold in 2010.