Navistar to manufacture diesel engines in Brazil

28 October 1998

Navistar International Corporation has signed a letter of intent to form a joint venture with a Brazilian company to manufacture diesel engines in South America for a broad range of truck applications. Under the agreement, Navistar will acquire 50% interest in Maxion Motores Ltda. from Iochpe-Maxion S.A., which currently sells diesel engines to Ford Motor Co., General Motors Corp., AGCO, and Mercedes Benz in South America. Maxion is the current diesel engine market share leader in the Mercosul market.

Maxion Motores has manufacturing facilities in Canoas, Rio Grande do Sul, Brazil and Cordoba, Argentina. Local assembly and sourcing of new International(R) products will achieve the local content requirements to compete effectively in all of the Mercosul including Brazil, Argentina, Paraguay and Uruguay.

The joint venture will continue to produce the current Maxion products while adding the 7.3L V-8 turbo diesel engine. The 7.3L V-8 diesel is currently supplied to Ford Motor Co., for a range of vehicles in North America and also is used in International(R) brand trucks and school buses. The demand for the Navistar's 7.3L V-8 diesel has grown from under 100,000 units per year in 1994 to nearly 300,000 units per year this year.

It is anticipated that the joint venture will be finalized by the end of the year. Production of the 7.3L V-8 diesel engine is slated to begin in August 1999 at one of the Maxion manufacturing plants.

The Navistar, Maxion Motores joint venture represents Navistar's second step in expanding its business interests in the growing South American market. Navistar created a subsidiary, Navistar do Brazil, in 1997; entered into a third party contract manufacturing arrangement early in 1998; and began distributing International(R) brand medium and heavy duty trucks to customers in Brazil in September.

Source: Navistar International Corporation