Caterpillar, Navistar to pursue strategic alliance

PEORIA, Ill. — Caterpillar Inc. and Navistar International Corp. have signed a Memorandum of Understanding (MOU) to pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms.

The companies plan to develop 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.

Through this alliance, Caterpillar plans to target a 2010 introduction of a North American Cat branded heavy-duty truck for severe service applications, such as road construction, large infrastructure projects and oil and petroleum development. 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.

The companies also 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.

In addition, the companies plan to expand their existing remanufacturing relationship to include Navistar's recently introduced MaxxForce on-highway engines, and to pursue additional remanufacturing opportunities as new vehicles and engines are developed.

The initiatives contemplated by the MOU are subject to completion of due diligence, execution of definitive agreements and regulatory approvals.