Ford and Navistar announced they entered into a consent injunction in which Navistar will continue shipping 6.4L Power Stroke diesel engines and Ford will pay, without deductions, full-price for each engine.
The full court documents were filed Friday.
According to Bear Stearns, however, Ford probably will also have to cut a check for over $100 million Navistar to reimburse for past deductions. The order also requires officers from both companies to meet in an effort to resolve the dispute.
“Our sense is ‘officers’ means ‘CEOs’ (which we think NAVZ was lobbying for) and that the meetings will occur in the next 30 days,” Bear Stearns said in a release.
“We believe that the only change in this dispute is that negotiations will continue out of the public forum. We think this is beneficial to both companies, as airing dirty laundry potentially damages both brands. Also, we learned that, on Wednesday, the judge signaled he might not convert the temporary restraining order to a preliminary injunction if the lawsuit were to continue to trial. We score this round in Navistar's favor.
“Based on legal disclosures that Ford must now pay $7,673 per engine, we estimate that Thursday's decision will cost Ford $750 to $1,000 per engine more vs. what they had been paying -- or roughly $250-300 million annually.
“Our sense is that Ford’s new products won’t drive positive results. With the Louisville shutdown (with only a 6-day supply of inventory) and the immediately higher engine costs, the Super Duty launch has been anything but smooth.”