Navistar Undecided on Engine Strategy image

Navistar tries to get US government approval for a new engine model that will be ready next year.

Initially Navistar was planning to manufacture a new generation diesel engine, but then changed his mind and announced it was developing another model. This change made investors’ shares drop 8% as analysts raised the problem of the costs for the transition to the new engine.

Navistar, known for producing the International brand school buses and heavy trucks, declared that the new engine will function with liquid urea that will cut nitrogen oxide emissions, a pollutant linked to asthma. But this move has been announced before by engine maker Cummins Inc and truck maker Paccar Corp.

“It fell short of my expectations,” said Morningstar analyst Basili Alukos of the move. “I was expecting or hoping for them to abandon their engine business completely and start buying from a third-party supplier.”

Investors began to question whether Navistar’s indecision concerning the engine strategy will make trucking companies less willing to purchase the company’s vehicles. In June Navistar faced a quarterly loss after it took a $104 million charge for warranty claims on engines that were sold in 2010 and 2011.