Navistar chairman bullish despite fears that the market is going soft

CHICAGO (Feb. 1, 2000) — Amid concerns that North America truck sales are cooling, Navistar International Corp. is holding firm on its forecast of 405,000 heavy and medium-duty trucks sold in the United States and Canada in fiscal 2000, down from about 465,000 units in fiscal 1999. Navistar’s fiscal year ends Oct. 31.

Navistar chairman John R. Horne blamed recent weakness in heavy truck orders on seasonal demand and a shift in buying patterns to more medium-duty vehicles. In the past three weeks, Navistar’s shares have fallen about 18%.

“As I have said before, there has been a sea change in the demand for new trucks,” Horne said. “While heavy trucks once drove total truck tonnage, the explosive growth of e-commerce has increased the demand for medium trucks, where our International brand is the market share leader.”

Horne also said that the company believes it can achieve meaningful competitive and economic advantage through achieving scale vertically in its truck business as opposed to achieving scale through geographic expansion.

“We believe we have more synergistic opportunities between heavy and medium truck and school bus in North and South America in the next five to 10 years than those for manufacturers who are trying to achieve scale in heavy truck by adapting their platforms across North and South America and Western Europe,” Horne said.

He explained that the company’s next generation medium vehicle to be introduced in early 2001 is being designed so that there is a commonality in engineering, parts and manufacturing processes for all three of the International product lines — medium and heavy trucks and school buses.