WARRENVILLE, Ill. — Navistar’s Brazilian subsidiary has licensed the largest diesel enginemaker in China, Dongfeng Chaoyang Diesel Co., to manufacture and sell select diesel engines in that country.

MWM International Industria De Motores Da America Do Sul (MWMI), a subsidiary of Navistar International, says that under the licensing agreement, an MWMI affiliate and DCD will establish strategic cooperation in the areas of engine development and vehicle application for diesel engines on Chinese vehicles.

Specific terms of the agreement are not being disclosed by either company, and the agreement is subject to approval by the government of China.

“I consider this strategic cooperation with DCD a big step forward in our growth strategy of utilizing our assets and what others have developed as we tap the growth markets in China,” said Daniel C. Ustian, Navistar chairman, president and chief executive officer. “This aligns with our strategy of providing great products to our customers, and a competitive cost structure to assure profitable growth for investors.”

Initial estimated annual volumes are expected to be 40,000 to 50,000 engines per year and start of production is forecasted in early 2008. The agreement may be extended to other engine families and other countries in the Asian region.

MWMI produces a broad line of medium and heavy duty diesel engines ranging from 50 to 375 horsepower for use in pickups, SUVs, vans, light, semi and heavy trucks, and buses as well as agricultural, marine and electric generator applications. OEM customers include a number of the most important corporations in the automotive, agricultural and industrial segments, including Ford, General Motors, Land Rover, Volkswagen, Volvo, Nissan, CNH and AGCO.