Navistar to use new engine technology to meet emission standards

Navistar International Corp (NAV), which makes an international brand trucks, fell the most in four weeks after announcing it expected additional costs to introduce an engine that would comply with US emission standards after its earlier technology fell short of the requirements.

According to Navistar, the engine, called In-Cylinder Technology Plus, added ''urea-based after treatment'' to its exhaust gas recirculation, or EGR, technology to meet 2010 US Environmental Protection Agency rules. A 13-litre engine would be available in early 2013, with a 15-litre engine to follow, according to a slideshow presentation by the company.

Chief financial officer Andrew Cederoth said on a conference call, that the company needed to increase its product development efforts, but it would work  hard to minimise this incremental spend. He added when the company launched it anticipated some incremental cost to accommodate the additional hardware.

The failure of the company's previous engines to comply with EPA regulations contributed to a fall in its shares and making the Lisle, Illinois-based Navistar, which also makes commercial and military trucks as well as buses, a potential takeover target.

Navistar had put $600 million into development efforts for EGR heavy truck engines, which failed to meet the 2010 rules. The US Court of Appeals in Washington on 12 June threw out a US  EPA interim rule under which  Navistar could keep selling non-compliant engines if it paid penalties of as much as $2,000 each.

Navistar did not  clarify where it stood on EPA certification of EGR engines or what fines it would have to pay until the new engine was ready.