Navistar announces joint venture in India

A wholly owned affiliate of Navistar International Corporation has signed a joint venture agreement with Mahindra & Mahindra Ltd. of India to produce diesel engines for medium and heavy commercial trucks and buses.

The joint venture, to be named Mahindra International Engines Ltd. (MIEL), will be 51% owned by Mahindra & Mahindra (M&M) and 49% owned by Navistar. The combined investment of the two companies will be $90 million over the next five years.

This marks the second such joint venture with M&M, India a leading automotive manufacturer, following a 2005 JV that today makes light, medium and heavy commercial vehicles for India and export markets. The new company’s advanced diesel engines will power the full line of trucks and buses produced by the preceding JV beginning in 2009. Engine components will be sourced locally, going up to 85% within two years, due to the strong availability of quality parts and materials from Indian suppliers.

Mahindra International Engines Ltd will build a new plant in India, with production start-up targeted for April 2009. Initial capacity is projected to be 25,000 units per year, ramping up to 40,000 per year within five years.

“The first production engine will be a 7.2-liter, in-line design that has been very successful in commercial truck and bus applications in South America, and Mexico,” said Waldey Sanchez, president and chief executive officer, MWM-International, a wholly owned subsidiary of International Truck and Engine Corporation, another Navistar affiliate.

The joint venture company will also provide sourcing services and engineering services to another Navistar affiliate, International Truck and Engine Corporation, which has operations in North and South America.

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