WARRENVILLE, Ill. (June 21, 2005) — Navistar International said its operating company International Truck and Engine will enter into a joint venture with Mahindra & Mahindra of India to produce and market light, medium and heavy commercial vehicles for India and export markets.

The joint venture, to be named Mahindra International, will be 51 percent owned by Mahindra and 49 percent by International. The combined investment of the two companies will be more than $80 million over the next two to three years. The joint venture is subject to regulatory approval and the execution of definitive agreements.

Daniel C. Ustian, Navistar chairman, president and CEO, said that the company’s plan to enter the Indian market constitutes a major step in its global growth strategy. “Equally important to our growth strategy is International’s intention to use India as a significant supply base for sourcing components and materials,” Ustian said. “In addition, the joint venture, along with Mahindra’s group companies, will provide engineering services to International and the venture for the design and development of truck and bus products.”

Ustian noted that as part of the joint venture, a development centre will be opened at a yet-to-be determined location in India, which is expected to grow to 300 engineers.

Deepak (Dee) T. Kapur, president of International’s truck group, said International believes that the Indian market for trucks is on the verge of exceptional growth.

Mahindra International is expected to produce commercial trucks and buses starting in 2007 in an updated Mahindra facility. The state-of-the-art factory will include cab assembly, vehicle assembly, and a paint shop. The vehicles will have 90 percent local content from the start due to the strong availability of quality parts and materials from Indian suppliers.

The venture will use Mahindra & Mahindra’s extensive distribution network to rapidly launch a full range of new medium and heavy commercial vehicles based on International’s existing product platforms. The venture is also expected to export vehicles to many regions of the world through its own distribution channel, as well as International and M&M’s overseas networks.