Navistar Finds Growth in Non-Traditional Markets

Navistar International Corporation today reported that growth in non-traditional vehicle markets is paying off as total first-quarter worldwide shipments were flat despite a 6% decline in Class 6-8 commercial truck and school bus shipments in the United States and Canada brought about by a mid-cycle correction coupled with the end of the 2006 pre-buy.

Worldwide shipments of school buses, Class 6-7 medium trucks and Class 8 heavy trucks and non-traditional vehicles for the three months ended January 31, 2007, totaled 27,500 units, down 0.4% from the 27,600 units shipped in the same period a year earlier. Non-traditional shipments were up 24% to 7,500 units from 6,000 units in the first quarter of 2006. Non-traditional shipments include military vehicles sold overseas as well as other export sales, small bus, Class 4-5 vehicles and stripped chassis for the motor home and step-van markets. With the exception of export, Class 5 and military businesses, Navistar did not participate in these markets in 2005.

Shipments of schools buses, Class 6-7 medium truck and Class 8 heavy trucks in the United States and Canada in the first quarter totaled 22,400 units, down 6.4% from the 24,000 units shipped in the first quarter of 2006.

Navistar is the world’s largest mid-range diesel engine manufacturer, and the company’s engine facilities shipped a total of 104,000 units during the quarter, down from 123,100 units a year earlier. Shipments of diesel engines to Ford Motor Company were down by nearly 19,000 units.

The company has not changed its previously announced forecast of industry volume for the United States and Canada for its fiscal year ending October 31, 2007. It is anticipated that sales of medium and heavy trucks and school buses will range from 325,000 to 347,000 units, which would represent a decline of between 24% to 28% from the record 454,500 units sold in fiscal 2006.

While Navistar typically does not break out its own segment forecast of U.S. and Canadian industry sales, to demonstrate the rapid growth in its non-traditional markets, the company said it anticipates that its own sales of non-traditional vehicles in fiscal 2007 will range between 35,000 units to 40,000 units, a gain of 20% to 26% over fiscal 2006 sales.

Daniel C. Ustian, Navistar chairman, president and chief executive officer, said the goal is to achieve $15 billion in revenues with 10% segment margins by 2009 with good returns at all points of the business cycle.

Ustian said that the company maintained its market share position for the first fiscal quarter year-over-year and, more importantly, “maintained our stance on pricing and collected for the full value of our products.”

“With our first quarter market share position in our core businesses, and the growth in our non-traditional businesses, we continue to be focused on delivering on our commitments by aggressively implementing a plan based on three strategic initiatives: great products, a competitive cost structure, and profitable growth,” Ustian said.

“Even with the industry expected to be down approximately 25% in 2007 and engine shipments slowing, we believe the growth in other areas and our focus on margin improvement will enable us to deliver a solid 2007,” Ustian said.

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