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Navistar outlines emissions strategy, hints of new products during Analyst Day

LISLE, Ill. -- Navistar International rolled out the red carpet to investors and analysts at its new ultra-modern global headquarters here this week, assuring them the company has a firm handle on its in-cylinder EPA2010 emissions strategy.


LISLE, Ill. — Navistar International rolled out the red carpet to investors and analysts at its new ultra-modern global headquarters here this week, assuring them the company has a firm handle on its in-cylinder EPA2010 emissions strategy.

Investors were greeted with the news that Navistar has submitted its 13-litre MaxxForce engine to the EPA for certification at 0.2 grams per brake-horsepower hour. Currently, Navistar has been redeeming emissions credits that allow it to produce and sell engines that produce slightly higher levels of NOx, which it earned as a reward for producing engines in the past that were cleaner than they needed to be.

If the EPA, for whatever reason, rejects Navistar’s submission, the manufacturer will have to pay non-compliance penalties (NCPs) on each engine it sells once it runs out of emissions credits. Dan Ustian, chairman, president and CEO of Navistar told analysts: “That’s Plan B and we don’t plan to use Plan B.”

Each engine model Navistar produces has its own bank of emissions credits. Once the 13-litre MaxxForce is certified, Navistar will systematically submit its remaining engine designs for approval.

“We’ll work through the 13 with the EPA and then we’ll follow that with the 11,” Jack Allen, president, North America Truck Group, told a small group of truck journalists. “We’ll use the credits we have and if need be, we’ll use the provisions the EPA put forward a couple of weeks ago.”

He said customers will not be impacted in any way as Navistar goes through the certification process.

“Any issue between us and the EPA is between us and the EPA and the customer is not going to be brought into it,” Allen said.

Jim Hebe, senior vice-president of North American sales operations, said his message to customers is: “If you’re going to buy a truck from us, we’ll deliver it. It will perform as good or better than what we have out there today and it’s not going to cost you any more.”

Hebe said Navistar could have submitted its 0.2 g NOx engine to EPA for certification some time ago, but wanted to take the time that was available to further enhance calibrations and programming to deliver better fuel economy and performance.

Ramin Younessi, group vice-president of product development and strategy, noted the engine submitted for certification at 0.2 grams is no different than the one in operation today, aside from some subtle programming enhancements. There is a 91% parts commonality between the 0.5-gram NOx engine on the road today and the 0.2-gram engine submitted for certification, and some of the changes were not emissions-related, he noted.

“The only changes we made to the engine had to do with the fuel system, controls and electronics,” he said. “All the rotating parts have stayed nearly the same.”

Meanwhile, Navistar officials told the investment community they expect truck demand to continue to improve in 2012. The company projected industry-wide demand of 275,000-310,000 units for the Canada/US Classes 6-8 markets, representing a 5-18% increase in demand over 2011. The company would like to grow its share of the Class 8 market by 10 points this year, to about 31%. It also has its sights focused on growing its medium-duty market share from 40% to 50%, Hebe noted.

Navistar hinted of some new product introductions, including the reintroduction of its International LoneStar with a 500 hp MaxxForce 13 engine and a new Class 8 low cabover engine (LCOE) designed primarily for refuse applications. Hebe said the LCOE will be introduced at the Mid-America Trucking Show, placing Navistar into a segment in which it currently doesn’t have an offering – a segment that represents about 8,000 units per year in North America.

Younessi said impending fuel economy standards set by the US government to be phased in between 2014 and 2017 are a “non-issue for us.” He said Navistar can already meet the 2014 standard and the company had already set an internal goal to improve fuel mileage by 30% by 2015, which would exceed any improvements mandated by Obama


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