NAVISTAR AND FORD MOTOR COMPANY REACH NEW BUSINESS AGREEMENT

Companies to Continue To Collaborate on Medium Duty Trucks and Other Initiatives

Editor note: If you read between the lines, this means Ford will be moving on with their own diesel for Super Duty trucks and leaves open the question if Ford will follow Navistar with a super EGR cooler to meet 2010 diesel emission regulation or follow the crowd and use Selective Catalytic Reduction (SCR)  system, (urea.)

DEARBORN, Mich. and WARRENVILLE, Ill. (January 13, 2009)—Ford Motor Company (NYSE: F) and Navistar International Corporation (NYSE: NAV) have reached an agreement to restructure their ongoing business relationship and settle all existing litigation between the companies.

As a result of the agreement, the companies will end their current diesel engine supply agreement effective Dec. 31, 2009. However, the companies will continue to collaborate on a range of initiatives, including their existing Blue Diamond Truck and Parts joint ventures. Navistar will acquire additional equity in the Blue Diamond joint ventures, which will continue to offer dealers and customers F-650 and F-750 medium duty trucks, as well as parts support for a variety of Ford products, including Ford's PowerStroke Diesel-equipped trucks. Ford and Navistar also will continue their diesel engine supply relationship in South America. As a result of the agreement, Ford will make a payment to Navistar.

“Navistar and Ford benefitted from a successful partnership that provided value to both companies for nearly three decades. However, it’s in our best interests to resolve our conflict and continue our relationship with each other in other areas,” said Dan Ustian, Navistar chairman, president and chief executive officer. “The next phase of our relationship is consistent with Navistar’s strategy to diversify our customer base, while continuing to provide value to both companies through our existing joint ventures and our supply agreement in South America.”

"We are pleased to have reached an agreement with Navistar that we believe is in the best interest of both companies," said Mark Fields, Ford's president of The Americas. "This agreement comprehensively addresses our business relationship with Navistar and will help both companies focus on meeting the needs of our current and future truck customers."