Looking to the Future at Navistarhttp://www.fool.com/investing/general/2013/08/12/looking-to-the-future-at-navistar.aspx Raymond Boisvert
August 12, 2013
No one has all the answers, but by looking at events from the past and present we can begin to identify what challenges could face companies in the future. Let's look at Navistar's (NYSE: NAV) recent woes to see what tomorrow may hold.
Where has it been?
Opting for EGR technology lead to Navistar's heavy-duty 13-liter and 15-liter engines failing to meet the EPA's emission standards that went into effect in 2010. To be able to sell its "dirty" engines, Navistar had to use emissions credits it had saved up from previous years. After those ran out, the company faced stiff fines on every engine it sold, totaling about $10 million a quarter. To end the fines, Navistar turned to industry competitor Cummins (NYSE: CMI) to apply its SCR technology for the 13-liter engine and replaced the Navistar-designed 15-liter with a 15-liter manufactured by Cummins.
The entire fiasco cost an estimated $700 million and dropped Navistar's market share of heavy-duty trucks from 28% in 2010 all the way down to 11% at the beginning of 2013.
Where is it now?
CEO Troy Clarke took over the reins of the company in March and is facing an uphill battle to get Navistar back on track. Clarke must be ever vigilant as activist investors Carl Icahn and Mark Rachesky will be constantly looking over his shoulder. Collectively, the two men own more than 30% of the company and have four spots on the board.
Despite the ongoing troubles at Navistar, shares are up over 50% year to date. Not all investors are convinced that there is a turnaround in the works -- a staggering 23.5% of shares are held short according to Yahoo! Finance. There is no market consensus when looking at the prospects for Navista