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Volvo Trucks North America (VTNA) / October 17, 2018 The new Volvo VNL looks fast even when it’s standing still. On the road, aerodynamics and D13 with Turbo Compounding helps to save up to 7.5 % more fuel. .

Freightliner Trucks Press Release / October 19, 2018 .

Cummins Press Release / October 15, 2018 Purolator Courier Alexis Picard says it’s been cool to drive the all-electric test truck this summer that’s part of a joint project involving the package delivery company and Cummins. First, there is less heat in the cab, which has been nice on warm days in Ottawa. But he’s especially enjoyed the surprise on many of his customers’ faces when he pulls up to deliver something. “People are expressing excitement toward me driving the vehicle,” Picard said. “But more people, I would say, are shocked when they see me driving a vehicle that doesn’t make any noise and they hear my sound system over the engine. “It’s a bit of a nice feeling,” he adds with a smile. The unassuming “VÉHICULE ÉLECTRIQUE” could be an important bridge to the low-carbon future both companies want. Having experimented with various forms of low carbon energy for much of the past decade, Purolator is looking for a powertrain that can realistically replace combustion engines in urban areas. “It’s not just our customers but our employees who are pushing for change,” said Serge Viola, Purolator’s Director of Asset Management. “But any change must be reliable under all conditions. Our customers expect their packages will be delivered on time. That’s our business.” For Cummins, the test truck is a chance to learn more about electrification, building on its wealth of experience in hybrid-electric engines as the company establishes a new Electrified Power business. Cummins wants to offer customers a broad product portfolio – including clean diesel, natural gas, hybrids and electrification – so they can choose what works best for them. “Partnering with Purolator enabled us to be at the forefront of innovation and accelerate our learnings in the field,” said Julie Furber, Executive Director – Electrified Power at Cummins. “We have worked closely with Purolator on customer requirements to design and integrate the powertrain into this vehicle. We look forward to using our learnings on new development opportunities.” KEY CHALLENGES Purolator has experimented with a variety of approaches to incorporate alternative energy forms into delivery vehicles. The company had a fleet of diesel-electric hybrids, for example, and then experimented with a totally redesigned delivery vehicle that not only used electrified power but also improved driver ergonomics and used space more efficiently. The company even explored hydrogen as an energy source. But Purolator has never quite found the right combination of technology, reliability and manufacturing muscle in a partner to keep one of Canada’s most extensive transportation and logistics networks rolling in a new way. For Viola, implementing electrification comes down to three key challenges: • Can the battery range be sufficient to keep vehicles running on some of Purolator’s longer urban routes? • Is there a company behind the vehicle with a demonstrated supply chain and service network to produce and service the number of electric vehicles Purolator needs? • And perhaps most importantly, what happens if the power goes out overnight at one of Purolator’s hubs? “I don’t envision having enough off-the-grid generating power at any one site to charge-up 30 or 40 vehicles,” he said. “We have to have a plan even in the unlikely event that the power goes out overnight at one of our facilities.” So far, Purolator has been happy with the test truck, Viola said. But he wants to see how it performs on longer routes and in the coldest part of a Canadian winter. WHAT’S BEEN LEARNED Cummins started work on electric powertrains long before the Electrified Power business started earlier this year. The partnership with Purolator, in fact, goes back to 2016. The test truck contains 12 battery modules totalling 62 kilowatt-hours (kWh) of energy. The battery modules can be connected in LEGO-like fashion to store and release the energy that ultimately turns the vehicle’s wheels. The truck has logged about 5304 km (3296 miles) in field testing and another 6,000 km (3,728 miles) during development testing. On average, it has run about 35 km (21 miles) per day in temperatures ranging from 10 degrees Celsius (14 degrees Fahrenheit) earlier this year to 30 degrees Celsius (86 Fahrenheit) over the summer. Viola said the truck has been able to complete its route and get back to the garage for recharging with plenty of power to spare. The company has started putting it on a 70-km route to learn more about its limits. “Our driver has been a little nervous coming back, but we’ve never had a problem,” he said. Cummins’ plan is to run the test vehicle for 12 full months, gather as much information as possible, and use what is learned in the company’s future product offerings. Cummins has pledged to have an all-electric powertrain for urban buses on the market by the end of 2019. The company is focusing on the urban bus and truck markets initially because that’s where it thinks the infrastructure for electrification will develop first. Cummins believes it has the manufacturing expertise and service network to quickly play a leading role in the electrification market. While pleased with the test so far, Viola is reluctant to predict just when much of Purolator’s fleet will be electrified. He’s waiting for a partner that can build 300 to 400 trucks and meet the company’s key challenges, first. .

Mack’s market share in North America — a region responsible for more than 90 percent of Mack’s business — dropped from 7.7 percent to 6.6 percent over the past year. The company’s market share also decreased in the first quarter (8.9 percent to 6.5 percent) and the second quarter (8.2 percent to 6.9 percent) 90 percent of Mack brand business is in North America because: (a) Volvo Group wants to promote Volvo brand trucks in most global markets and; (b) The Mack brand portfolio, aside from Australia, doesn't have purpose-designed trucks for the global markets. It's hard to sell a North American spec truck in most global markets, and then there's little to no after-sales support. What's ironic is America's Ford Motor Company offers a full range of purpose-designed global market heavy trucks, but Sweden's Mack brand does not.

Jon Harris, The Morning Call / October 19, 2018 Orders continued to fly in at Mack Trucks during the third quarter, but supply constraints again hurt the manufacturer’s ability to gain market share in a hot North American market. Mack took in 7,456 orders in North America during the quarter, up 22 percent from 6,108 a year earlier, according to a report released Friday by Mack’s parent company, the Sweden-based Volvo Group. In terms of completed trucks, Mack delivered 5,526 vehicles in North America in the third quarter, up 20 percent from 4,624 in the same period in 2017. Despite those double-digit gains, Mack’s market share in North America — a region responsible for more than 90 percent of Mack’s business — dropped from 7.7 percent to 6.6 percent over the past year. The company’s market share also decreased in the first quarter (8.9 percent to 6.5 percent) and the second quarter (8.2 percent to 6.9 percent). “Mack Trucks has been hampered by supply constraints following the transition into its new range during the spring, which is why Mack’s heavy-duty market share declined to 6.6%,” Volvo wrote in the report. Volvo assembles its Mack heavy-duty rigs at a Lower Macungie Township plant, which employs about 2,400 workers who earlier this year started building the company’s new highway truck called Anthem — a new product enabling Mack to seriously compete in the long-haul market for the first time in a long time. “While Mack continues to do well in our core segments, our overall market share has been impacted by two main factors: supply chain issues facing the entire industry and the fact that we ramped up our new highway product during one of the hottest highway markets in recent memory,” Mack spokesman Christopher Heffner said in an email. “Now that we’ve worked through the ramp, our teams are fully focused on managing supply chain issues and we expect our market share will grow.” In the meantime, Mack continues to lag behind its sister company, Volvo Trucks, in the North American market. For example, right before Volvo explained in the report why Mack’s market share dropped, the company said Volvo Trucks’ share increased from 8.6 percent to 10.5 percent in North America over the past year. Volvo Trucks also has brought on new products over the last year: the refined VNX model meant for logging and heavy-equipment transport, and the redesigned long-haul VNL series truck. Further, the order increases Volvo Trucks is experiencing in North America continue to dwarf Mack’s figures. Volvo Trucks took in 18,311 orders in North America during the third quarter, up 211 percent from 5,896 a year earlier. Delivery-wise, Volvo Trucks sent out 7,955 completed trucks in North America during the quarter, up 57 percent from 5,076 last year. While there will inevitably be a correction downward in the cyclical heavy-duty truck market, times remain good for now — giving Mack more time to grow its market share in North America. With strong demand for freight and a shortage of transport capacity, freight rates have increased and boosted orders for highway trucks, Volvo has said. The company reiterated its forecast of 300,000 new heavy-duty truck registrations in North America this year, up significantly from about 244,000 last year. In 2019, the company is projecting an increase to 310,000, the report notes. “We see fairly robust demand for the Mack products for at least a few more quarters to come,” Mack President Martin Weissburg told reporters in August at the Mack Customer Center in Allentown. Issue on the horizon? Shares of Volvo Group declined Tuesday, after the company announced that it had detected an emissions control component in some of its vehicles was degrading more quickly than anticipated, which could cause engines to exceed emissions limits for nitrogen oxides. The company said the cost to correct the issue with the part, which comes from an unidentified outside supplier, “could be material.” While it’s early, Volvo did say the largest volume of potentially affected engines has been sold in North America and Europe — the company’s two largest markets. Asked whether any Mack vehicles may be affected, Volvo spokesman Claes Eliasson wrote in an email: “That is too soon to say. We are still evaluating the scope of this. The investigation so far indicates that the degradation does not seem to affect all vehicles and engines in the same way and to the same extent.”

Ford's Jim Farley: Why 'It's the right time' for dealers Video - http://www.autonews.com/article/20181020/VIDEO09/310209998/fords-jim-farley-why-its-the-right-time-for-dealers

Thomson StreetEvents / October 19, 2018 WARRENVILLE -- Edited Transcript of Navistar International Corp earnings conference call Thursday, September 6, 2018 at 1:00:00pm GMT Corporate Participants Martin P. Ketelaar - Navistar International Corporation - VP of IR Michael Cancelliere - Navistar International Corporation - President of Truck & Parts Persio V. Lisboa - Navistar International Corporation - Executive VP & COO Philip Christman - Navistar International Corporation - President of Operations Troy A. Clarke - Navistar International Corporation - Chairman, President & CEO Walter G. Borst - Navistar International Corporation - Executive VP & CFO ================================================================================ Conference Call Participants Andrew Millard Casey - Wells Fargo Securities, LLC, Research Division - Senior Machinery Analyst Ann P. Duignan - JP Morgan Chase & Co, Research Division - MD Faheem Farid Sabeiha - Longbow Research LLC - Research Analyst Jerry David Revich - Goldman Sachs Group Inc., Research Division - VP Joseph O'Dea - Vertical Research Partners, LLC - Principal Joseph D. Vruwink - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Associate Neil Andrew Frohnapple - The Buckingham Research Group Incorporated - Analyst Stephen Edward Volkmann - Jefferies LLC, Research Division - Equity Analyst Steven Fisher - UBS Investment Bank, Research Division - Executive Director and Senior Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and welcome to the Navistar Third Quarter 2018 Earnings Results Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded. I'd now like to introduce your host for today's conference, Mr. Marty Ketelaar, Vice President, Investor Relations. Sir, please go ahead. -------------------------------------------------------------------------------- Martin P. Ketelaar, Navistar International Corporation - VP of IR [2] -------------------------------------------------------------------------------- Thanks, Liz. Good morning, everyone, and thanks for joining us for Navistar's third quarter 2018 conference call. Today, we will discuss the financial performance of Navistar International Corporation for the fiscal period ended July 31, 2018. With me today are Troy Clarke, our Chairman, President and Chief Executive Officer; and Walter Borst, Executive Vice President and Chief Financial Officer. After concluding our prepared remarks, we will take questions from participants. In addition to Troy and Walter, joining us for today's Q&A session are Persio Lisboa, Executive Vice President and Chief Operating Officer; Michael Cancelliere, President of Truck and Parts; and Phil Christman, President of Operations. Before we begin, I'd like to cover a few items. A copy of this morning's press release and the presentation slides has been posted to the Investor Relations page of our website for reference. The non-GAAP financial measures discussed in this call are reconciled to the U.S. GAAP equivalents and can be found in the press release that we issued this morning as well as in the appendix of the presentation slide deck. Today's presentation includes some forward-looking statements about our expectations for future performance, and the company expressly disclaims any obligation to update these statements. Actual results could differ materially from those suggested by our comments made here. For additional information concerning factors that could cause actual results to differ materially from those included in today's presentation, please refer to our most recent SEC filings. We would also refer you to the safe harbor statement and other cautionary notes disclaimer presented in today's material for more information on the subject. With that, I'll turn the call over to Troy Clarke for opening comments. Troy? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [3] -------------------------------------------------------------------------------- Hey, thanks, Marty, and good morning, everyone. Thanks for joining our call today. In the next few minutes, I'll provide you with a brief overview of the quarter and then Walter will walk you through the financials. And then after that, we'll do our best to take your questions. Hey, Q3 was a strong quarter for Navistar, and I really want to thank the team here for all the hard work that went into it. Here's a couple of the headlines. The industry was strong in Q3, with July Class 8 orders setting an all-time record. We think the market will remain strong in the fourth quarter and into 2019. Navistar Class 8 heavy retail market share was up nearly 3 points year-over-year. Revenue was $2.6 billion in the quarter, up 18% year-over-year. Adjusted EBITDA was $218 million, an increase of 12%. And we remain on track to achieve positive free cash flow for the year. The alliance with Volkswagen Truck & Bus, now the TRATON Group, proceeds according to plan as we progress with the procurement joint venture and settle in on an array of exciting technology projects. Given Q3 performance and the strong truck market, we will again increase guidance for 2018. And Walter will provide the details in a minute. And last but not least, although we normally talk about the coming year on the December call, I'd like to provide some early insight. We are bullish on 2019, and we believe that it will look a lot like 2018 with Class 6 to 8 trucks and buses in our core markets coming in, in a range of 385,000 to 415,000 units. Class 8 was in those numbers in the range of 255,000 to 285,000 trucks. So let me provide a little more insight into Q3 results and expectations for the rest of the fiscal year. And I'm going to do this by touching on 3 industry topics: orders, supplier constraints and costs. First, let's talk orders. GDP growth in Q2 was 4.1%, the strongest quarter since Q3 of 2014. In July, the Consumer Confidence Index rose to 127.4, the highest level since 2000. And year-to-date, the ISM Purchasing Managers Index is well above 50, the highest level since 2004. These conditions support fleet utilization, higher freight rates and improved carrier profits. Look, it's just a great time to be in the truck business. July was a record month for Class 8 orders at over 52,000 units. These numbers have created industry backlogs into Q2 of 2019. So we're now questioning if all these orders will be built. Are customers placing orders with several OEMs, ready to cancel one if the other is delivered first? Or how many orders are placeholders or slots reserved for stock units that can be moved out or canceled at a later date? These are all good questions. Look, at Navistar, we attempt to manage the reporting of orders as accurately as possible. July was a good order month for us as well. We don't expect a lot of cancellations. Let me tell you why. In the third quarter, our core market net orders were up 90% year-over-year. July was Navistar's highest order receipt month in more than a decade. Navistar's order share grew to 18%. At the end of Q3, Navistar is the only OEM to have grown Class 8 retail share during the fiscal year. In the third quarter, we achieved strong year-over-year growth in Class 8 heavy retail market share, thanks to the performance of the LT Series on highway truck and the 12.4-liter A26 engine. The company's share of the 13-liter heavy registrations more than doubled year-over-year through June 2018. And this did not detract from the company's 15-liter share, which also grew during that time frame. July was the first big month for orders for the new MV Series medium-duty truck as many dealers sold down the old DuraStar and now need to restock. The MV is generating real excitement. And through July, our order receipts in medium were up by a percentage point year-to-date and the July order share in Class 6 and 7 was 38%. So we took in a lot of orders in Q3, July in particular, yet incidental order cancellations have remained very stable for the last 18 months, and we don't see it changing much going forward. We expect to build the units in our backlog. The second topic I'll touch on is manufacturing capacity that were constraints to production. After all, the best way to avoid a potential cancellation is to build and deliver the truck. We did experience some supply-related issues that reduced the number of chargeouts in the quarter. These supplier disruptions resulted in units not produced, and the others that were built but not shipped awaiting a part. If not for these issues, we would have charged out and shipped more trucks in the quarter. As we increased build rates in the spring and early summer, we had to work with a handful of industry suppliers to bring more capacity online, re-source some parts and tools to other suppliers, and improve productivity to support our increased schedules. The issues related to these suppliers are behind us, and parts are now available in sufficient quantities to support production and complete any trucks requiring a part. Off-line inventories have returned to normal, and we are working through a delivery backlog of trucks ready to transport to customers and dealers. But the supply chain remains really tight. And most of our key suppliers supply the industry as well. The system is basically running without buffers, so things like tooling or equipment downtime, power outages or even weather delays can cause disruptions or line stoppages. Hey, these are events we can't forecast, but they tend to be minor in scale. And we believe we have a realistic view of supplier capability in our revised guidance. The third topic relates to cost increases. In the quarter, we experienced additional costs due to increased transportation cost, premium freight and other charges due to some of these supplier issues and increased commodity prices, particularly steel. These are industry issues that affect all OEMs similarly. In this year, we are more than offsetting these increases through some hedging as well as design in procurement savings. In addition, we published price increases in July ranging from 1% to 3% across our various models. Like all price increases, they will impact units going into the backlog and won't be realized until early next calendar year. Hey, in summary, the current strong economy and order backlog support a strong truck market for the remainder of the year and well into 2019. And although Q3 performance is impacted by supplier constraints, we continue to monitor the supply base very closely to avoid major disruptions. We are expecting a strong Q4. And as such, we're increasing guidance. The LT and the LT with the A26 is gaining share in the market. Our order share in the new MV medium truck is growing and all International trucks are delivering the best uptime for our customers that anyone can remember. And now we're taking orders for the new Class 4/5 CV Series, which launches before the end of the calendar year. We believe 2019 will be another very good year for the industry and for Navistar. And with that, let me turn it over to Walter. -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [4] -------------------------------------------------------------------------------- Thank you, Troy, and good morning, everyone. I'm happy to report on another strong quarter. We grew our financial results year-over-year despite facing several supplier headwinds. We also grew market share in the quarter in a very healthy industry, led by our Class 8 heavy products. Against this backdrop, we are further increasing our 2018 guidance. Let's review the third quarter and then I'll provide an update on our expectations for the remainder of the year. In the quarter, as Troy indicated, revenue grew 18% year-over-year to $2.6 billion. The improvement was driven by a 26% increase in our core truck and bus volumes. Moreover, chargeouts of Class 8 heavy trucks grew 71%, double the industry growth rate of 34%, resulting in 2.7 percentage points higher heavy share. Gross margin for the quarter increased to 19.6% of revenue, up 1.1 percentage points from Q3 2017. The improvement reflects higher volumes and lower warranty expense. In the quarter, warranty expense, excluding preexisting, fell to 1.7% of revenue compared to 2.4% last Q3, the lowest percentage this decade, reflecting the improved quality of our new products. We continue to face higher freight costs and higher commodity prices, particularly for steel, which has increased over 30% since the calendar year began. Additionally, the supplier constraints resulting from higher industry demand that Troy mentioned earlier impacted our performance. Since April, we experienced delays in certain components leading to higher company inventories, lower chargeouts, cost inefficiencies in the assembly process and additional freight costs. These units are now making their way through the delivery process and will be reflected in fourth quarter sales. Supplier bottlenecks remain, but we continue to actively work with our suppliers to minimize these issues. Structural costs were up $22 million year-over-year, largely from higher investments in the development of next-generation diesel and electric powertrain programs as well as higher employee compensation expenses, expenses related to growth initiatives and profit-sharing accruals related to supplemental benefits for certain retirees. As a percentage of revenue, structural cost declined to 12.1% versus 13.3% last year. Net income for the quarter was $170 million or $1.71 per diluted share versus $37 million or $0.38 per diluted share last year. In the quarter, we recognized a gain from onetime items totaling $66 million, which included a settlement gain of $71 million related to a business economic loss claim. Adjusted EBITDA increased 12% to $218 million versus $194 million in the third quarter of 2017. Turning to the segment results. The performance of our Truck segment reflects strong Class 8 market share growth in robust industry conditions. Sales grew 25% in the quarter to $1.9 billion, reflecting higher core volumes, particularly Class 8 heavy and Class 6/7 medium-duty trucks. Truck segment profitability grew to $165 million in the third quarter from $7 million a year ago. The increase in profits resulted from growth in truck volumes together with cost-savings initiatives, including those from the procurement JV with TRATON Group, offset by higher commodity and structural costs as well as the impact of supplier constraints. The segment also benefited from onetime items, including the settlement gain I mentioned earlier. Parts segment revenue increased 3% to $605 million as higher volumes, including double-digit growth in Fleetrite branded components, more than offset the gradual runoff for the Blue Diamond Parts business. Profit for the quarter declined $13 million to $144 million as we experienced a shift in revenue mix to more private-label brand sales from proprietary part sales as well as higher freight expenses and higher internal allocation of development and engineering expenses to the Parts segment. Additionally, the prior year included income related to the sale of our fuel injector business. As a percentage of revenue, Parts segment profit margin rebounded from the first half of the year to nearly 24%. The improving economic conditions in Brazil are supporting our Global Operations segment. In the quarter, revenues grew 6% from last year to $89 million, driven by an 8% increase in engine volumes. Segment profit for the quarter was $4 million, comparable to last year's quarterly results that included income related to the sale of excess machinery and equipment assets. Our Financial Services segment is benefiting from higher average portfolio balances due to financing originations, with revenues increasing 5% to $65 million. Segment profit was $23 million this quarter, also comparable to last year, reflecting higher interest margins that were offset by an increase in the provision for loan losses in Mexico and a small asset impairment charge. Also in the quarter, Navistar Financial completed a new 7-year, $400 million senior secured term loan B facility, of which $150 million was upstreamed via an intercompany loan to the manufacturing operations. Moving to cash. We ended the quarter with $1.1 billion in manufacturing cash. During the quarter, net inventories increased by $233 million, largely stemming from the supplier constraints I mentioned earlier and the impact of increased line rates. This negatively impacted net working capital and free cash flow. However, due to the actions taken over the past several months to resolve these issues, we expect free cash flow to be strong in Q4 and positive for the fiscal year. Our strong cash balance positions us to repay the $200 million of convertible notes that mature next month and adds flexibility to address the $400 million of convertible notes maturing next April. We are once again increasing our 2018 financial guidance. We are raising our revenue guidance range to $10.1 billion to $10.4 billion for the year. With higher volumes and improvements in warranty, we are raising our gross margin guidance to 3/4 of a percentage point increase year-over-year. This reflects our stronger performance to date and our belief that we'll be able to mitigate any potential supply chain disruptions in the fourth quarter. As a result, we are increasing our 2018 adjusted EBITDA guidance upwards by $50 million to a range of $775 million to $825 million. And we're increasing our 2018 year-end manufacturing cash guidance to greater than $1.25 billion due to the improved profitability outlook for the year as well as lower-than-anticipated capital expenditures. In summary, 2018 is shaping up to be a breakout year for Navistar. And as Troy mentioned, industry conditions for 2019 are expected to remain strong as well. These are very exciting times for Navistar as we're growing Class 8 share in a robust industry environment while further positioning ourselves to be successful in the future. With that, I'll turn it back to the operator to begin the Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from the line of Andy Casey with Wells Fargo. -------------------------------------------------------------------------------- Andrew Millard Casey, Wells Fargo Securities, LLC, Research Division - Senior Machinery Analyst [2] -------------------------------------------------------------------------------- Recognizing there is a lag between raw material cost increases and the impact on the P&L, I wanted to ask a couple of questions on that. First, are you seeing more or less a stabilization in the forward cost headwinds that you expect to offset? Or are you seeing additional inflation that potentially could spill over into 2019? And then, second, you mentioned hedging as a part of the way you're offsetting costs this year and also price increases that should benefit 2019 at some point. If material costs stay flat from here, are the price increases enough to more than offset the hedging presumably rolling off? -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [3] -------------------------------------------------------------------------------- Yes. Andy, it's Walter. Let me start and maybe Persio or Phil will want to jump in here as well. We are watching raw material costs closely in particular commodities. We've previously talked on our calls here and kind of dimensionalized what we have in the way of commodity costs, in particular what steel costs are as a portion of that. And what we had said at that time and still directionally true today is that we have about $400 million of commodity costs that impact us directly. About $200 million of that are related to steel. So as we've seen, steel prices increased by over 30% since the beginning of this calendar year. That does have an impact on -- in -- on our material costs going forward. As you indicated, we do rolling contracts with our suppliers on commodity contracts, in particular in steel. And those will be rolling off over time. We also do hedging activities for some of our other commodities. So we do expect that, that will impact us negatively in 2019 versus '18, given that we had those rolling contracts and hedges in place for this year and those will roll off and maybe be replaced at higher levels for next year. But we continue, on the other hand, to work our material costs as well. And so as we -- that's preliminary at this point, and we'll provide further guidance on our December call. But as we look at '19, we think we'll be able to offset those commodity headwinds with additional cost reduction initiatives on our material costs overall, including utilizing the procurement joint venture that we have with the TRATON Group, formally VW Truck & Bus, in that regard. And then on top of that, we'll see where the pricing goes. As Troy indicated, we have announced 1% to 3% price increases across-the-board. We would see that starting to impact our sales in the 2019 time frame given the -- that those units initially go into the backlog before they get produced. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [4] -------------------------------------------------------------------------------- And this is Troy. Let me jump in on that right there. Pricing certainly is intended to reflect increased costs that impact the industry at an industry level, things like commodities or regulatory content, right? That's just characteristic of our industry. But pricing also reflects the superior performance of the product in things like fuel economy, better residual values. And in fact, our new LT is demonstrating itself to be a very good, a superior-performing product in the market. So even in the absence of some of these industry structural things, given our starting point with the performance of our new products, it would appear that there are pricing opportunities and certainly, net pricing opportunities as we continue to experience success in the market. -------------------------------------------------------------------------------- Operator [5] -------------------------------------------------------------------------------- Our next question comes from Steven Fisher with UBS. -------------------------------------------------------------------------------- Steven Fisher, UBS Investment Bank, Research Division - Executive Director and Senior Analyst [6] -------------------------------------------------------------------------------- You guys gave some color on the order trends, but maybe just offer a little bit more perspective here. I mean, have you seen large fleet placing orders earlier than usual this year? And what would your base case be for the cadence of orders for the rest of calendar 2018? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [7] -------------------------------------------------------------------------------- Persio, I'm trying to direct some traffic here. Persio, you want to give some of your insights with regards to what you see? -------------------------------------------------------------------------------- Persio V. Lisboa, Navistar International Corporation - Executive VP & COO [8] -------------------------------------------------------------------------------- Yes. And I'll get -- I have Michael here as well so he can help me with the answer. But I think we see -- now first, I think on the fleet side, there is obvious an activity taking place. And we -- this is now a season when we start seeing orders going up, which is not expected to happen. I think there is a lot of movement in terms of trying to have lots reserve for next year with our large customers. But that really is not different than what we would expect. I think now we are -- we're all now very conscious of the supply constraints that Troy alluded to, and we are managing through them. So we -- we are -- we feel very good about where we are today. And when we look at our production and the backlog that we have, as Troy mentioned in his comments, it is very robust. And I think that provides us good visibility into the first quarter and second quarter of next year, which makes us feel that the order activity is robust and strong and solid. So we've been consistent in how we are seeing this coming from customers. Not as -- not a lot of cancellations. We don't see that happening. And actually, we have specs defined. We have the trucks that we need to build well lined up in our production lines. -------------------------------------------------------------------------------- Steven Fisher, UBS Investment Bank, Research Division - Executive Director and Senior Analyst [9] -------------------------------------------------------------------------------- Okay. And Troy, you mentioned it's a great time to be in the truck business, then Walter calls it a breakout year. I guess, can you talk about the 1% to 3% price increase? To what extent do you think the market is now entering a period of really new pricing dynamic? We talked a lot about it over the last several quarters. I mean, is it now strong enough that we're finally able to reflect this great time to kind of be in the truck business on a breakout year? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [10] -------------------------------------------------------------------------------- Yes. I think, Steven, I mean, this -- just about -- probably -- I'll give you some color I think which maybe gets to it. But we're going to have to see, right? And I think that our competitors will do the same. What's really exciting from my standpoint, kind of building off of what Persio said, we don't see in the orders that we're currently seeing -- yes, the orders are coming a little bit earlier than maybe they would seasonally. But the orders that we're seeing that are coming in are really orders that are largely replacement units. And these are replacement units of products that went into service in 2014 and 2015. And now is a good time to pull those out of the markets. It's kind of 4 years later, there's a strong -- the used truck market is strengthening and the trucks they're being replaced with, obviously, on the other side of the 2017 greenhouse gas regulations, have much superior operating costs, principally fuel economy, like our LT, which made over 5% fuel economy improvement from the old model to the new model. So a lot of the order activity that we see is really, as Persio indicated, nailing down slots that are largely replacement demand. There is, however, a piece of that demand moving forward which really reflects fleet expansion given, I think, what will be more consistent GDP growth over 2% and ultimately, a shift in mode from more designated to more dedicated transport, which, at the end of the day, requires more trucks and requires fleet growth. And so I'm particularly bullish on the fact that we are -- I believe through this fall, we will see orders begin to reflect that. So this year, it isn't so much fleet expansion, which has been curtailed by things like drivers and stuff like that. They've had a year to get their arms around how to get more drivers and they've added 30,000 drivers into the drivers -- into the driver pool as it is. Now I think as we roll into 2019, our fiscal 2019, the balance of this year and early next, we're going to see fleet expansion for a handful of reasons. To me, that's the best environment we've had in the 8 years that I've worked here to seriously say, how do we create a pricing environment that is healthy for the industry that certainly reflects better operating cost and the value that we're providing to our customers, and then give us an opportunity also to recover some of the investment that not only us, but the other OEMs have made in producing truly superior products. That's my thought process on it, Steve. So I mean, hey, it's a competitive market. I know we always say that. So it'll -- we'll see how much of the prices stick. But I think that circumstances have never been better to try to work those through. -------------------------------------------------------------------------------- Steven Fisher, UBS Investment Bank, Research Division - Executive Director and Senior Analyst [11] -------------------------------------------------------------------------------- And have your customers expressed confidence in being able to seat the trucks that they're ordering? You mentioned it, the driver shortage. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [12] -------------------------------------------------------------------------------- I mean, the -- look, we know -- there's a bunch of our customers we know as we manage direct sales and there is an increasing level of confidence on their part with customers we don't know, but that our dealers know. But the feedback I'm getting from the dealers is those issues are being worked through. Yes. -------------------------------------------------------------------------------- Operator [13] -------------------------------------------------------------------------------- Our next question comes from Steve Volkmann with Jefferies. -------------------------------------------------------------------------------- Stephen Edward Volkmann, Jefferies LLC, Research Division - Equity Analyst [14] -------------------------------------------------------------------------------- I'm curious, you talked a little bit, Troy, about sort of the trucks that are sort of waiting to be shipped out. And I just want to make sure I understood that. So the supplier issues are basically settled and it's just a matter of sort of working with backlog through and out the door. Is that the way to look at it? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [15] -------------------------------------------------------------------------------- Yes. Let me have Phil Christman give you a little bit more detail, because the delivery process is a little different than a car, that sometimes the cars -- all cars are ready to go to the customers as soon as they leave the backdoor of the factory. It's a little different in the trucking business. And so there's a little bit of work in progress here that I'll ask Phil to describe. -------------------------------------------------------------------------------- Philip Christman, Navistar International Corporation - President of Operations [16] -------------------------------------------------------------------------------- Yes. Steve, so what's happened is, as you know, as we ramped up, as the industry ramped up, there were industry-wide supply issues largely in the early summer period. Those systemic capacity issues are really behind us. Those trucks are -- have been -- parts put on those trucks and they are really in the delivery process. In the delivery process, a lot of those get bodies put on them, a lot of those get modifications put on them. So they are through that process and headed to the customers. Obviously, we're excited to get these high-performance vehicles that we're producing a lot of customer in -- a lot of customer interest into the customers so they can get in them in their hands. That's the process we're going through right now. The supply chain remains tight. And so we continue to manage those issues, which are -- unlike what we experienced in early summer, these are more things -- more subject to things like unscheduled machine downtime, shipping disruptions and things like that, that we continue to manage through. -------------------------------------------------------------------------------- Persio V. Lisboa, Navistar International Corporation - Executive VP & COO [17] -------------------------------------------------------------------------------- And Steve, this is Persio. If I may add, too, you should also consider that now we are -- we continue with our production rates now really high. So now what we are doing is we're really taking those units out of the system, the off-line units. They have to be shipped at the same time that brand-new units are coming down off the line. So it is also a little bit of the capacity and the delivery to customers that now is being managed through right now. -------------------------------------------------------------------------------- Stephen Edward Volkmann, Jefferies LLC, Research Division - Equity Analyst [18] -------------------------------------------------------------------------------- Okay. All right. And then maybe this is for Walter. And I know, Troy, you started talking a little bit about some of the themes for 2019. And I guess I'm just trying to think through the next obvious question about profitability. And I'm curious, I know you're probably not ready to put any numbers around this, Walter. But I'm wondering if there are some buckets of things that we can talk about that are sort of headwinds and tailwinds to profitability. Obviously, you won't see the $70 million settlement next year. But presumably, maybe you'll have a little bit better mix because of the new product. I don't know. I don't want to put words in your mouth, but I'm curious. Obviously, I'm trying to sort of think about whether margins, we should expect to be better next year than this year. -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [19] -------------------------------------------------------------------------------- Yes. Well, we should've been managing the business to continue to grow our margins. And so when I call this a breakout year, as was alluded to earlier, it's not only what's happening on the pricing front, but also what continues to occur on the cost front. So we will provide more insights on '19 in our December call. But what I alluded to earlier is we do see some commodity headwinds there. We think we'll be able to offset those with our additional product cost reduction initiatives, including using the joint venture that we have with TRATON. And if the market is able to take price given the more favorable conditions here, then that'll be favorable for our results. And we obviously look to continue to grow our share next year as well, which, with industry volumes being similar to this year, should be favorable for our revenue and our profitability. But let me stop there and we'll provide just some more insights in December. -------------------------------------------------------------------------------- Stephen Edward Volkmann, Jefferies LLC, Research Division - Equity Analyst [20] -------------------------------------------------------------------------------- Are there more structural cost opportunities? Or are we sort of through that? -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [21] -------------------------------------------------------------------------------- We're never done on structural costs. The guys are laughing here because that's -- we're very happy to say that to our team. I think what we are looking at is, and you see it a little bit in our third quarter results here as well, when you look at structural cost, just as a reminder, we think the structural cost is engineering and SG&A. We're investing in some portions of our business. So we've got new product programs as part of the alliance that we're investing in. On the other hand, we're driving the engineering organization to be more efficient. And then similarly, on the SG&A side, we're investing in certain growth initiatives to uptake us to the next level. But at the same time, other areas of the business continue to need to run as lean as possible given our focus on lean practices in all our operations. So there's pluses and minuses there; maybe they equal out. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [22] -------------------------------------------------------------------------------- Yes. I mean -- Steve, this is Troy. I think kind of that's the story. I mean, yes, there are additional structural cost reduction opportunities, which we plan on taking advantage of and we have many of those already planned out. But I think it's, do you take those to the bottom line or do we invest those? And especially -- I think our mindset today is these are nominal investments, but we're going to continue to invest in this uptime proposition. It's paying big dividends. And we need to invest in improving our dealers' capability. We need to invest in being able to get parts out to our dealers faster. We need to invest in the system support that helps us to become the uptime leader. We're going to invest in these new product programs that we have going across-the-board with our new alliance partner. And we've talked in the past about things like electric vehicles and brand-new diesel powertrains and that kind of stuff. And although the great part about the alliance is that those development costs are shared, there are certainly localization and adaptation-type costs which -- and engineering activities that we have to bear. And then the third thing is, and Walter referenced this in his remarks, we're investing in our Parts business, okay? We have additional brands. We have reman activities. We have systems and additional market adjacencies that we're going to continue to invest in. And we're going to fund a lot of this stuff basically through the continued efficiencies and economies that we're able to generate through basically the investment we've made in a lean enterprise and lowering our breakeven points. So I think, you bet, are there -- can we be better? You bet, we can be better. And we're going to take that, we're going to invest it and we'll make more money for the shareholders. -------------------------------------------------------------------------------- Stephen Edward Volkmann, Jefferies LLC, Research Division - Equity Analyst [23] -------------------------------------------------------------------------------- Okay. I'm sorry, I'm hearing a lot of investment. Is there any reason not to think margins would be higher next year on higher sales? -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [24] -------------------------------------------------------------------------------- Like I said, we'll give you some guidance in December. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [25] -------------------------------------------------------------------------------- Yes. You wanted some themes. We gave you some themes. -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [26] -------------------------------------------------------------------------------- Yes. We gave you some themes. We'll get to that as... -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [27] -------------------------------------------------------------------------------- We're still finalizing our finance for next year, so it'd be premature. -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [28] -------------------------------------------------------------------------------- But thanks for asking, Steve. -------------------------------------------------------------------------------- Operator [29] -------------------------------------------------------------------------------- Our next question comes from David Leiker with Robert W. Baird. -------------------------------------------------------------------------------- Joseph D. Vruwink, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Associate [30] -------------------------------------------------------------------------------- This is Joe Vruwink for David. I think I had heard earlier your share of orders in the July quarter was close to 18% and your retail market share has typically been closer to 16%. Is 18% kind of a sustainable figure in your view, given I would imagine while you've done quite a bit of product refresh, probably not all of your offering is completely redesigned at this point, and maybe you could give how much has been redesigned. But just maybe some thoughts on where order share and as a consequence, where retail share might trend over coming quarters. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [31] -------------------------------------------------------------------------------- Hey, Michael, do you want to -- you want to kick that one off? -------------------------------------------------------------------------------- Michael Cancelliere, Navistar International Corporation - President of Truck & Parts [32] -------------------------------------------------------------------------------- Yes. Sure. So July certainly was a strong month. And really, Joe, our entire product line is new or refreshed. And we've seen the results of strong demand from our customers and enthusiasm with our dealers. Particularly, the LT with the A26 continues to gain a lot of traction. With fuel costs up 20% year-over-year, the influence of drivers, greater than ever. We continue to receive very positive feedback on the fuel efficiency, the quietness, the steering visibility and just the overall performance of the LT. That, in combination with the focus we've had on uptime, has really, really made our product attractive to the customers, which is what attributed largely to the almost 3% -- 3 share point gain. One of the signs that we view very positive is customers that have purchased the LT or the LT with the A26 less than a year ago continue to significantly add quantities to their fleet as a additional vote of confidence. In fact, we had a customer recently that was running a little less than 100 LTs with A26s and was so pleased with the performance of them, they just added 500, which is one of the -- a pretty good size order from a truckload segment customer. I would also add that dealers are extremely bullish on the new product line. They're seeing increased demand within their market across the entire product line. They're building up their stock inventory. And in fact, one of our larger dealers reported to me just yesterday that 6 out of every 10 units that are sold from stock are going to Conquest customers. And that's really across not just the LT Series, but our entire product line. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [33] -------------------------------------------------------------------------------- So Joe, let me just highlight it to you in maybe a slightly different way. The -- last year, early last year, when we did not have a lot of share gains to talk about, we talked about at that time order share gains. And the reason why we did that was because if we're going to raise that number, just the math that suggests, our order share has to average more than our actual share. And in fact, some of you guys even said, hey, does this really mean it's going to translate to market share? And in fact, this year, we're happy to point that it did. So there was like a 1-year lag. But in fact, we picked up 2.7 points, almost 3 points of heavy share or Class 8 share as we speak. So to your point, it is our plan. If to gain share we have to have order share average over our current share. So your question, is 18% sustainable? I don't know how to answer is it sustainable, but it's our intention to average higher than our current market share. And 18% sounds pretty good to me. The other thing I would tell you, though, is orders are lumpy, okay. The way we manage and report orders and the way our competitors do, there's just enough differences there in timing and how stock units are worked that it's lumpy. So you can't look at it, I think, in any particular quarter. But certainly over the period of a year, and I would point back to last year, if 3 out of 4 quarters, we're able to point to order share gain, we have confidence that we will experience market share gain as well. So your -- so the answer to your question is yes, whether it's 18% or some other number, we'll let the math and the market kind of figure that out. But we don't pull back from the thought that we're gaining share. We've got the products to do it. We did a great job explaining that. That's how it's going to work. -------------------------------------------------------------------------------- Joseph D. Vruwink, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Associate [34] -------------------------------------------------------------------------------- And then I guess just to follow up on that, a good point was brought up that typically, when a new product is introduced, you're not going to get maximum buy-in by a fleet on that first go-round. So typically, you get a trial run and maybe the next year's buy is at full capacity for what share you might capture. If the LT, which was kind of on the front end of all the product redesigns, if that's now getting to see kind of the higher penetration, if you will, because it's been a lot -- around a little bit longer, where are we on some of the other new model lines? So in other words, as the newer models goes through the same process, would you expect market share to be ticking up, just a function of that natural evolution? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [35] -------------------------------------------------------------------------------- Yes. Yes. I mean, I think you've captured it very accurately. One thing I might add to that is also different product variations. I mean, even on the LT, which is the first one that we launched, we are just now launching the final engine transmission combination of that product. We've had orders for most of the year that we won't be delivering actually until the fourth quarter because of the release of that particular combination. In the medium-duty truck, the MV that we launched is probably a little less. The number of variations tend to be more focused, I think, on the bodies that go on the back. But you're right. So even after you launch the product, for, I don't know, Phil, a year, 1.5 years afterwards, we're still releasing significant build combinations that are in demand by the market. So market share doesn't mature or settle out in, I don't know, Phil, would you say, 18 to 24 months? -------------------------------------------------------------------------------- Philip Christman, Navistar International Corporation - President of Operations [36] -------------------------------------------------------------------------------- Yes. That figures. Of course. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [37] -------------------------------------------------------------------------------- After we launch a product. -------------------------------------------------------------------------------- Philip Christman, Navistar International Corporation - President of Operations [38] -------------------------------------------------------------------------------- (inaudible) A26 location too, right? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [39] -------------------------------------------------------------------------------- Yes. They're going to go. I mean, we just launched the A26 in the location, which is a -- 13-degree segment of the location on our severe service trucks. That's critically important. So you're spot on, Joe. I mean, this is -- just having launched all the product isn't the end of the journey, we haven't launched all the product. Hey, great news. We're at the beginning of this journey. And so we have high expectations. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- Our next question comes from Ann Duignan with JPMorgan. -------------------------------------------------------------------------------- Ann P. Duignan, JP Morgan Chase & Co, Research Division - MD [41] -------------------------------------------------------------------------------- Troy, maybe I'll start with you. Can you explain the guidance for 2019 for Class 8 industry? At midpoint, you're guiding flat year-over-year despite what we've seen with orders. And what would have to happen for it to be at the low end of your guidance? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [42] -------------------------------------------------------------------------------- Yes. Ann -- I'm just going to tell you, Ann, I'm disappointed you weren't the first person in the queue. You typically are. I don't know what happened there. If we've done something wrong, I apologize. So -- but, yes. And what we have a pretty good line of sight on, and I think the industry does as well, is what the first half of the year looks like, right? So I think with the first half of the year and where we think the backlogs are and the discussions we're currently having with customers and dealers with regards to orders, we're pretty confident in the guidance that we've provided. I think the real question then for the industry is, what happens in the second half of the year in -- of 2019 from an order standpoint in anticipation of 2020. Whether the market takes a breath, how -- does GDP keep growing at a level above 2%? So I mean, we thought long and hard about this and recognize we're kind of one of the first ones out there putting a stake in the ground. But we think directionally, if it's a strong first half of 2019, those are the numbers. If it's a strong second half of 2019, we'll adjust the numbers as -- and I'm sure we won't be the first to do that. That's how we're looking at it. And I don't want to make it any more complicated than that, actually. -------------------------------------------------------------------------------- Ann P. Duignan, JP Morgan Chase & Co, Research Division - MD [43] -------------------------------------------------------------------------------- Yes. But just looking at the midpoint maybe, Troy, first half, second half, what's your current thinking in terms of percent first half, percent back half? Just in the ballpark of what you're guiding to today? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [44] -------------------------------------------------------------------------------- Yes. I don't know how to tell you that answer, though we think first half is probably stronger than the second half at this point in time. -------------------------------------------------------------------------------- Ann P. Duignan, JP Morgan Chase & Co, Research Division - MD [45] -------------------------------------------------------------------------------- Okay. I guess we'll make our own forecast on that. And then just looking -- talking about fleet expansion and talking about introduction of ELDs, we are seeing fleets add capacity, particularly on the private side as well as others. However, our expectation then is that those new trucks will have fewer miles put on them per year and that could result in a longer replacement cycle. Would you agree with that thinking, Troy? Or how do you guys think about that if we're going to expand the fleet, but we're going to put fewer miles per year. Therefore, instead of a 3-year cycle, we're going to move to maybe a 4- or 5-year cycle. Is that the right way to think about the next cycle? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [46] -------------------------------------------------------------------------------- Well, I -- first off, I agree with the underlying assumption that there's fewer miles. And I think that that's a phenomenon as we get into more -- as the percentage of commercial carriers becomes more dedicated and less designated, okay, if that kind of make sense. So I agree with that underlying assumption. And as such, one of the reasons why we're bullish that there is in fact more trucks to be sold as the market settles into that kind of mode, I guess I haven't thought it through on what it might mean to the ownership cycle from 3 year to 4 year or 5 years. It's a good question. But I think -- and I think part of that is going to have to do with used trucks. And of course, we've had a little bit of a distorted view of used trucks here for a while that -- but it is getting straightened out. So we're going to have to come back to you on that. It's a good issue. The underlying assumption, I believe, is correct. I don't know that I can make the claim that it will shorten the ownership or length in the ownership cycle yet. But certainly, that's -- it's not out of the realm of possibilities. -------------------------------------------------------------------------------- Ann P. Duignan, JP Morgan Chase & Co, Research Division - MD [47] -------------------------------------------------------------------------------- And I agree, I guess it will depend on these market which would incentivize replacement. But I'll leave there it in the interest of time. Appreciate your feedback. -------------------------------------------------------------------------------- Operator [48] -------------------------------------------------------------------------------- Our next question comes from Neil Frohnapple with Buckingham Research. -------------------------------------------------------------------------------- Neil Andrew Frohnapple, The Buckingham Research Group Incorporated - Analyst [49] -------------------------------------------------------------------------------- Parts segment revenue growth was a little bit better than we expected in the quarter. But can you just talk more about the outlook going forward? I mean, do you think you can continue to deliver year-over-year growth in the segment? And when will the Blue Diamond Parts be less of a drag on the growth rate? And I guess I'm really just trying to get at when can we expect segment sales to really accelerate into the mid- to high single-digit range like some competitors? -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [50] -------------------------------------------------------------------------------- Yes. Neil, it's Walter. Like -- as we've discussed on prior calls, there's some ins and outs here on Blue Diamond Parts. We were very consistent on that. It's declining over time, but it's a very -- a slow burn rate. So we continue to get good sales from that business. In the meantime, our private-label business, Fleetrite, and the reman business, through ReNEWed, have higher sales than Blue Diamond Parts. And as you heard in our commentary, Fleetrite had double-digit growth again this quarter, which it's been doing quarter-after-quarter. So we have some parts of the business that are growing nicely, others that are winding down slowly like BDP. And then as Troy indicated, we are looking to find additional opportunities to grow the Parts business even further. And then once you look a little bit longer into the future, as we start getting some of our new alliance products and so on, that will provide additional Parts revenue and profit opportunity. So Parts is really a function of some ins and outs. We were happy to see that the margins here in the third quarter were more similar to what we saw earlier in the year. And that continues to be something that we want to watch together with you guys because some of these different businesses within the Parts segment have higher and lower margins. -------------------------------------------------------------------------------- Neil Andrew Frohnapple, The Buckingham Research Group Incorporated - Analyst [51] -------------------------------------------------------------------------------- Okay. Got it. That's helpful. And then, Troy, you mentioned that the used truck market is strengthening. But can you talk more about the outlook for North America used truck? I mean, would you expect the supply side to start increasing, obviously, given all the deliveries that will be occurring and start to put downward pressure in pricing -- on price in the next few quarters? I mean, any more color you can provide there? And is that the biggest risk? Do you think that it's the cycle in your view? Or... -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [52] -------------------------------------------------------------------------------- Well, truthfully, what I think happens is I don't think -- I do think that -- so first off, because of the delivery issues not just with ourselves, but with others, we're slower getting these trucks into the fleets than I think that they -- than the customers would like. So they've been holding on to their trucks a little bit longer. So this large quantity of used trucks that are -- that would flow into the used truck market is going to be more metered out than we've seen in years past. That's one thing. The second thing is, as the fleets require more capacity as the fleet size goes up, something other than replacement demand, again, another reason to hold on to that used truck a little bit longer. And again, they come into the market, I think, on a more a gradual basis. So I would anticipate that a slug of used trucks come into the market and depresses prices. And then again, there are a lot of fleets and individuals who drive used trucks as their main business model. Again, given the demand of higher GDP growth, there seems to be strong demand. And I think this is what's important. There is strong demand for used trucks today. There is a nominal shortage of used trucks today. So I don't anticipate the collapse of used truck pricing. I anticipate -- the same phenomenon has happened in the past, but it in fact will be far more gradual and I think will not be as disruptive as we have seen in the past. -------------------------------------------------------------------------------- Operator [53] -------------------------------------------------------------------------------- Our next question comes from Jerry Revich with Goldman Sachs. -------------------------------------------------------------------------------- Jerry David Revich, Goldman Sachs Group Inc., Research Division - VP [54] -------------------------------------------------------------------------------- I'm wondering if you folks can provide an update on your connected offering, how many trucks are now part of your connected fleet? And as you're getting past the 3-year initial free rollout period, can you just talk about what kind of renewal rates you folks are seeing on the software-as-a-service offering? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [55] -------------------------------------------------------------------------------- Yes. Yes, no, we're excited to talk about that. So we -- our OnCommand Connection is this telematics offering, largely intended to provide us the opportunity to give higher uptime to fleet, not just to owners of our trucks. This is a product offering that we provide to all of our customers. And we have about 475,000 trucks that we're monitoring on a very regular basis. About 2/3 of those are in fact not Navistar or International branded truck, about 1/3 of those are. This is a service -- the basic uptime service, we basically provide for free. It's just a -- it's just something. It's an ingredient to our brand. And we provide, again, this handful of basic services which are intended to improve uptime to all customers. Very exciting on a very -- and just recently, and I'm going to, I think, fill in the June time frame, we began, in our heavy on-highway trucks, installing a telematics device of our own design. It's a purchase device. So it's on 100% since June of our heavy trucks. This is the first product that in fact has additional services that can be purchased or subscribed. And unfortunately, because we launched it in June, we're very excited about it, I think we got great plans on how to make it work and market around it, but it's really too early to tell because there is in fact a free period of time for it. And so we're really kind of not, I would say, into the strong revenue part of that. We need another year before we'll be able to look back and probably give you the kind of results that you want. That said, as we piloted the services we can offer with this, things like automated or advanced automated driver inspection, we do have customers who are paying us for those type of services. But they have all been pilots for us to try to figure out what the right kind of pricing in contractual terms might be. So the 475,000, the kind of OCC original product customers continues to proceed. It is not something we sell a lot into because it's just part of our brand. Exciting for us is now the installation of our own telematics device and our own telematics service, which then allows us to provide advanced and customized services for which we believe that there will be -- for which we -- the plan is to have a revenue stream. It's just too early for us to tell you or give you much insight as to what might that look like yet. -------------------------------------------------------------------------------- Jerry David Revich, Goldman Sachs Group Inc., Research Division - VP [56] -------------------------------------------------------------------------------- I appreciate the update. And separately, on the supply chain with the actions that you and your supply chain partners have taken along with the rest of the industry, what do you view as peak production capacity that's feasible in this cycle compared to the last cycle? Are the actions that have been taken so far just catching up with the -- where the supply chain ideally would have been 2 quarters ago? Or are they adding enough capacity to help bring down the lead times for the industry as a whole? What's your sense? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [57] -------------------------------------------------------------------------------- Yes. I mean, the longer that the -- the longer that these backlog stays, they are just organically, so to speak, this then becomes more efficient. Increments of capacity are being added, some of which we don't even know about. And I think the industry adjusts over the course of the fourth quarter to current production rates, not just ourselves, but on the part of the industry. So I think it will be fair to say, by the end of the fourth quarter calendar year, the industry will have adjusted to those production rates -- or the production rates of the fourth quarter. And you could -- I guess someone could say, well, that's the capacity of the system. And I think that, that would be reflected by the fact that buffers and banks and safety stocks would be restored by this point in time. Now the backlogs continue to expand and we all take our line rates up because we -- to satisfy customers, we got to -- no customer's going to wait 300 days for a truck, then that's going to stress it again. But I would say, the path run today with a feel that it's headed towards equilibrium here sometime in the fourth quarter. -------------------------------------------------------------------------------- Operator [58] -------------------------------------------------------------------------------- Our next question comes from Faheem Sabeiha with Longbow Research. -------------------------------------------------------------------------------- Faheem Farid Sabeiha, Longbow Research LLC - Research Analyst [59] -------------------------------------------------------------------------------- I was wondering if you can provide a little color around your higher EBITDA guide for the year. I was just wondering, what would get your EBITDA to the high end of that range? I mean, are there big trucks you've missed that may go out the quarter? Is that higher military field? Is that a Parts performance? If you could give details around that would be great. -------------------------------------------------------------------------------- Walter G. Borst, Navistar International Corporation - Executive VP & CFO [60] -------------------------------------------------------------------------------- Yes. It's Walter. A number of things go into our guidance. But one of the things that would obviously impact that is where we are within the revenue range, right, so at the higher end of the range. We expect to be at the -- towards the higher end of guidance. We are -- we've got a good line of sight on what units will be delivered. We are still working through some of the supplier issues. So if that goes perfectly, then we'd be closer to the higher end than if there -- any additional issues pop up. As Troy indicated, we're kind of running full out here at the moment. And then on the margin side, we could be at the higher end of the guidance if our margins are a little stronger than what's implied. And we've been able to do that here this year. So we'll see where the actual is coming for the fourth quarter. -------------------------------------------------------------------------------- Faheem Farid Sabeiha, Longbow Research LLC - Research Analyst [61] -------------------------------------------------------------------------------- Okay. Great. And then can you also talk about what NAV is doing to drive double-digit growth in its Fleetrite parts brand? I mean, this brand has been performing well. And it would be great to provide some color on what's driving that strength. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [62] -------------------------------------------------------------------------------- Hey, Michael, do you want to make some comments on that? -------------------------------------------------------------------------------- Michael Cancelliere, Navistar International Corporation - President of Truck & Parts [63] -------------------------------------------------------------------------------- Yes. Sure. So Fleetrite is a brand that's been around for over 45 years and is well-known throughout the industry. And what we do is continue to invest in expanding product lines, not only for traditional all-makes parts, but also into parts availability for competitive brands. So for example, we recently launched a competitive crash parts program. It would have grills, hoods, bumpers and many other components that would be available for makes of trucks beyond our own brand. We're also looking at expanding availability and reach. Many of our dealers are looking at opening parts-only Fleetrite-type stores to reach a different customer base. Some of them already have opened them, but there were more plans in the works. So we're really going to leverage the success of the Fleetrite brand and the quality that it offers. Many of our Fleetrite parts are used in OE production, as customers really care not just about price, but they care about overall value, starting with quality. So we have a lot to offer there. And we're very bullish on what the future of Fleetrite will be. -------------------------------------------------------------------------------- Operator [64] -------------------------------------------------------------------------------- Our next question comes from Joseph O'Dea with Vertical Research. -------------------------------------------------------------------------------- Joseph O'Dea, Vertical Research Partners, LLC - Principal [65] -------------------------------------------------------------------------------- First question on the A26 and the share doubling year-over-year. Does that put it roughly kind of mid-single digits in the 6% to 7% range? And then based on what you see in the order book, could you talk about kind of where that share is going? And then what a time line looks like for getting that up into something that might be more like mid-teens? -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [66] -------------------------------------------------------------------------------- The -- great question. The number is above 7%, okay. So you were pretty close there at 6 to 7. It's above 7%. And actually, I want to go back to Michael again. I mean, he provided part of this explanation earlier. We -- with most major fleets, we have some number of these units in their fleets. And as they kind of prove themselves out, they will purchase more on their next cycle, I think. But Michael, why don't you go ahead and talk about that? -------------------------------------------------------------------------------- Michael Cancelliere, Navistar International Corporation - President of Truck & Parts [67] -------------------------------------------------------------------------------- Yes. Sure. So we've been very successful in A26 and continue to grow. The more customers get experience with the product, the more they continue to add to it. And it's really been doing a fantastic job from fuel economy, uptime, reliability, quietness, and drivers just really love it. And if you look at the heavy segment, the 2 biggest segments are the general freight segment and the leasing segment. And we continue to make inroads in both of those segments. So customer feedback is great. And again, the price of fuel, 20% up year-over-year. So it's more important than ever that customers have fuel-efficient tractors. We're making penetration gains in really all segments, the day cab as well as the sleeper. And then as we're offering it now in the vocational segment, we continue to see tremendous acceptance of the product in that segment as well. So we're optimistic about continued share growth in not only the 13-liter segment, but also the 15-liter segment as we continue to grow our overall Class 8 share. -------------------------------------------------------------------------------- Joseph O'Dea, Vertical Research Partners, LLC - Principal [68] -------------------------------------------------------------------------------- And then on the pricing side, when you talk about July pricing, the 1% to 3%, kind of a wide range, actually. So could you talk about whether that's just dependent on the customer mix? And then in addition, on the discount side, are you also able to dial back discounts for stocking your Conquest program so the net realizations end up being better than that 1% to 3% and then whatever cost you're offsetting? -------------------------------------------------------------------------------- Michael Cancelliere, Navistar International Corporation - President of Truck & Parts [69] -------------------------------------------------------------------------------- Yes. I mean, I think... -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [70] -------------------------------------------------------------------------------- Go ahead, Michael. Go ahead, please. -------------------------------------------------------------------------------- Michael Cancelliere, Navistar International Corporation - President of Truck & Parts [71] -------------------------------------------------------------------------------- Yes. So Joe, this is Michael. So yes, I think what's most important is that there's increased consideration in demand for the entire new and refreshed product line, and that's helped change the conversation with customers. It takes the focus off of initial price. It really transitions to a discussion of total cost of ownership. To most customers, price is a function of the value that they get. So when you look at the benefits that customers get in improvements in fuel economy, uptime and the driver acceptance of the product, the recently announced 1% to 3% price increase in July has seen varying degrees of positive price stickiness. That's across all segments of the market and all size of the customer. We think about it as there's just no substitute for demand, and as our market share gains increase, that's -- there's significant demand for our product, again, particularly in the larger segment of the business. We track quarterly how many orders we receive of 100 trucks or more. And on a quarter-over-quarter basis, third quarter this year versus last year, our demand for the product of a large -- large sales are up 68% year-over-year. And that really increases to a -- over 225 increase of the actual amount of units that are sold. So we're seeing -- with -- the demand impacts pricing. On the dealer side, look, the dealers are, as I mentioned earlier, bullish on the product. They're looking forward to restocking their lots at -- be in position to grow and improve their market share. They've got tremendous acceptance from customers in their market. And really, there was just an example the other day of a dealer that had sold 10 of the MV Series to a leader in the towing industry. And this customer had these for really less than 60 days. They were so impressed with the cab interior, the finish of the product that they added 100 additional orders, 100 additional MVs to that order. So again, price is always important, but it's really about demand. And we're confident we've got good demand for the product. -------------------------------------------------------------------------------- Operator [72] -------------------------------------------------------------------------------- That concludes today's question-and-answer session. I'd like to turn the call back to Troy Clarke for closing remarks. -------------------------------------------------------------------------------- Troy A. Clarke, Navistar International Corporation - Chairman, President & CEO [73] -------------------------------------------------------------------------------- Hey, just my thanks to everyone here for your interest in Q3. It was a very good, strong quarter, robust market. We are set up for a very strong close of 2018 and a great start to 2019. And I was talking to somebody the other day, and I said, "Man, if you're not having fun in today's market, then there's something wrong." I just got to tell you, this is the -- this is a great time to be in the truck market and it's a great time to be at Navistar. Thanks for your interest and look forward to talking to you all in mid-December. -------------------------------------------------------------------------------- Operator [74] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.

Ford summons its swagger, shifts marketing focus to keeping loyalists Michael Martinez, Automotive News / October 19, 2018 LAS VEGAS -- Ford Motor Co. is shifting its focus from winning new customers to persuading current owners to stick with its namesake brand. The new marketing approach, designed partly to rebut the impression that Ford is abandoning owners of Fusions and Fiestas as it stops developing new sedans, is part of a sweeping plan that the second-biggest U.S. automaker's leadership team laid out to North American dealers this week at the Bellagio resort here. The company vowed to shorten its product-development cycle to create the industry's freshest showroom; add affordable non-sedan models to the lineup; run the region through individual vehicle lines to maximize margins; and launch a new advertising campaign that plays up the company's history. With the Ford brand's U.S. sales falling 2.1 percent through September, Ford stock at a nine-year low and questions surrounding the strategy of CEO Jim Hackett, the company used this year's annual dealer gathering to offer the clearest look to date at its plan and to make an emotional appeal to rally retailers. The meeting is held every year but only a handful of executives typically attend. This year, virtually the entire senior leadership team was there, including Hackett, who has acknowledged not being as visible to dealers as he would have liked in his first 17 months on the job. "This is the first time I'm aware of where he took the time -- 20, 25 minutes on stage -- and really gave an outlook of where he's been," said Mike Pallotta, owner of Pallotta Ford-Lincoln in Wooster, Ohio. "It was great to hear the message directly from him." Dealers started the meetings, called "Inside the Oval," with a series of hands-on experiences at the Las Vegas Motor Speedway. They were among the first to drive preproduction models of the Ranger midsize pickup through an off-road course and to demonstrate its ability on rough terrain; they took hot laps in Mustang Bullitts; drove the Edge ST; saw the new Police Interceptor hybrid that's based off the next-generation Explorer; toured various new configurations of the Transit and Transit Connect vans; and walked through a hallway featuring demonstrations of products such as FordPass, B&O sound systems and Ford's telematics service for its fleet-sales businesses. They were among the first to see about 150 parts and accessories for the Ranger offered as part of a new partnership with Yakima. And they could enter their name to win rides in the GT supercar. Back at the Bellagio, they met with Ford executives in various conference rooms plastered with messages from the automaker's new "Built Ford Proud" ad campaign. One wall featured the Bullitt with the phrase "Never on Autopilot," while another showed a sprawling manufacturing plant with the words, "Small batches should be reserved for whiskey." Dealers also glimpsed a number of the campaign's television spots, which will start to air Saturday. The meeting concluded with an emotional call to action featuring an internal video titled "It's Time." "It's time to bring swagger back to the Ford Motor Company," actor Bryan Cranston said in a voiceover that played amid shots of the company's products. "It's time to have pride in who we are and what we do. It's time the whole world knows how proud we are of our family name, and it's time we take pride in the vehicles we make, of the future we will shape, and of the responsibilities we will take." Cranston, known for roles in "Breaking Bad" and "Malcolm in the Middle," is featured throughout the ad series. Product clarity One of the dealer body's biggest concerns has been a lack of clarity on Ford's product strategy. Executives faced backlash earlier this year when they announced they would discontinue virtually all of Ford's sedans, offering only a vague promise of adding "white space" silhouettes. Dealers questioned whether Ford would abandon entry-level sedan buyers to rivals such as General Motors, Toyota and Honda. Ford showed them its future vehicles for the next few years and explained how their total number of nameplates would increase by three by 2023. And Jim Farley, president of global markets, vowed to offer several vehicles in the entry-level, $25,000-and-under price point. "When you look at the showroom lineup, that's what really excites us," said J.P. Miller, owner of Paul Miller Ford in Lexington, Ky., and Ford's dealer council chairman. "The vibe I got is that dealers are really excited that the showroom of the future is coming a lot faster, and Ford's commitment to keeping that showroom fresh." There was one notable exception to the future product showcase: the Bronco. However, Farley used the hype around the off-roader to have some fun. During his presentation, he promised to show dealers "a Bronco," then flashed a photo on-stage of his own classic 1973 SUV. Less conquesting Among the biggest changes Ford communicated for the first time was a pivot from focusing on conquesting customers from other brands to retaining loyal buyers. The automaker plans to center its marketing efforts on keeping customers in the fold, communicating with them more often through connected vehicles and offering perks through a new rewards program on its FordPass app. "When we did all the data analytics, it became really clear, a loyal owner is so much easier for us to do business with than trying to get a customer from someone else," Farley said. "It was a big aha moment for us." Ford traditionally has had the strongest customer loyalty in the industry, although it's dipped slightly through July this year to 63 percent, according to data from IHS Markit. One area in which Ford can target its consumer base: the 13.5 million trucks owned in the U.S. Ford plans to build upon those numbers with a new loyalty program that will roll out in the U.S. next year. Ford declined to provide details, but said customers can earn points to redeem for meaningful rewards and that they fashioned it after studying brands such as Delta, Starbucks and rival automakers like Toyota. The plan also involves more interaction with the customer after they purchase their vehicle through connected modems, which Ford plans to have on all its nameplates within the next few years. The automaker wants to offer unique experiences, similar to how its Lincoln luxury brand has built a niche with services like standard pickup and delivery and chauffeur services. "There's so much choice in our industry now and there's so much great product," Farley said. "We really believe now, when you look at the new technology enablers, the next opportunity is to build a much more frequent relationship with the customer." Varied profit margins Ford is trying to shore up its bottom line by boosting the profit margins in North America to 10 percent. To do that, it's reorganized its business to focus on individual product lines. Kumar Galhotra, president of North America, transformed Ford's 11th floor to create 13 "franchise rooms" for individual products. A small leadership team spends each Wednesday walking through each room. Farley said one of the biggest discoveries they've made is how profit margin varies on a specific vehicle from region to region. They've started to allocate more inventory to the areas of the country they can make the best returns. "If you start to see our North America margins go up, we have no new product this year, and it's not coming from the market," Farley said. "It's controllable within our company." .

DAF Trucks Press Release / October 17, 2018 Stathams Motor Engineers is a recovery specialist. Their DAF CF features a detachable axle, a modification done by their bodybuilder, allowing it to run as either a 6x2 or 4x2. The vehicle is achieving a 10% fuel saving, equaling roughly £3,000 per year. Learn more: http://fal.cn/SBIb .

DAF Trucks Press Release / October 18, 2018 Do you know our engines were often used in ships as well? Watch the video closely and let us know how many times you can spot the DAF logo. #DAF90years .

Optifuel Lab 3 aims to reduce fuel consumption by 13% Renault Trucks Press Release / September 21, 2018 Renault Trucks is continuing its research into improving the energy efficiency of diesel trucks. With Optifuel Lab 3, the laboratory vehicle developed as part of the FALCON collaborative project, the manufacturer aims to reduce fuel consumption by 13% on a complete tractor-trailer combination. Optifuel Lab 3 combines technologies relating to aerodynamics, rolling resistance, driver assistance, energy management and the powertrain. The aim of Optifuel Lab 3 is to demonstrate a 13% reduction in fuel consumption compared with a standard Renault Trucks T and trailer. It brings together innovative technologies developed by a consortium of partners comprising Renault Trucks, Faurecia, Michelin, Total, FRUEHAUF, Wezzoo, Benomad, Styl'Monde, Polyrim, Enogia, the IFP Énergies nouvelles, the École centrale de Lyon (LMFA) and the IFSTTAR (LTE; LESCOT). Optifuel Lab 3 is part of the FALCON (Flexible & Aerodynamic Truck for Low CONsumption) project which receives public funding after selection by the French Public Investment Bank BPI France on the 23rd F.U.I. call for projects. Optifuel Lab 3's technological developments will focus on optimised tractor semi-trailer combination aerodynamics, connected low-rolling-resistance tyres, predictive energy-saving driving assistance and energy management functions, as well as an improved powertrain. Optimised complete tractor-trailer combination aerodynamics The aim is to significantly improve the aerodynamics of the combination to considerably reduce fuel consumption, particularly by introducing a variable-geometry trailer. Developed by FRUEHAUF in collaboration with Styl’Monde for the fairings, this “adaptive” trailer is intended to automatically take on an optimised shape by using empty loading space thanks to a built-in control and command system and sensors. The tractor's aerodynamics will also be improved by replacing wing mirrors with cameras, and a newly designed cab A-pillar based on a PhD thesis from the Fluid and Acoustic Mechanics Laboratory at the École Centrale de Lyon. Airflow will also be optimised by extending the front end and door and streamlining wheel arches. Side fairings will also be bigger and made from flexible material by Polyrim, like the side deflector extensions to provide continuity between the truck and trailer. Connected, low-rolling-resistance tyres On long-haul trips, tyre rolling resistance accounts for around 25% of fuel consumption. Michelin will develop tyres with low rolling resistance for the laboratory vehicle by integrating innovative technologies derived from research projects. Renault Trucks and Michelin will also use data obtained by sensors installed in the connected tyres. Predictive energy-saving driver assistance and energy management features Navigation and traffic (Benomad), meteorological (Wezzoo), and tyre (Michelin) data from Optifuel Lab 3 will be used by optimised predictive speed and cooling system controllers. This latest system will be equipped with new actuators to maximise energy savings. These developments will be accompanied by a new Human-Machine Interface specially developed in partnership with the IFSTTAR to provide the driver with an energy-saving, efficient and user-friendly driver assistance system. Alternator control will be made even more intelligent in order to optimise the balance between electrical energy production and internal-combustion engine fuel consumption. For Optifuel Lab 3, extensive work will also be carried out on the dual battery device with expected significant weight reduction and improved cold-start performance for the start battery and increased capacity and life time for the living battery. Powertrain: low-viscosity lubricants and Rankine waste heat recovery system The whole powertrain will benefit from new-generation low-viscosity lubricants developed by Total for reduced friction. In addition, performance studies will be carried out on test benches and integration studies will be conducted for two types of waste heat recovery system architecture based on Rankine’s thermodynamic cycle. The research is being carried out jointly by Renault Trucks, Faurecia, IFPEN and Enogia. Renault Trucks and its partners are aiming for a 13% reduction in fuel consumption on a typical long-haul trip. Optifuel Lab 3 will conduct its first on-road tests in 2019 and determine consumption savings assessments in 2020.

Matt Cole, Commercial Carrier Journal (CCJ) / October 18, 2018 Nearly 50,000 Kenworth and Peterbilt tractors and more than 3,000 Volvo tractors are now included in a recall affecting trucks equipped with Cummins ISX15 or X15 engines, according to documents from the National Highway Traffic Safety Administration. The recall stems from fuel lines potentially bursting if the fuel pump cooling circuit screen becoming restricted in certain driving conditions, such as on a long downhill grade. If the fuel line bursts, fuel could leak onto the road, and the engine could stall without warning. Daimler and Navistar have also announced recalls in recent weeks for the same issue. Cummins will be notifying owners of affected trucks, and dealers will replace the suspect fuel pump cooling circuit screen for free. Affected Kenworth and Peterbilt owners can contact Paccar customer service at 1-940-591-4220 with recall number 18E081. NHTSA’s Paccar recall number is 18V-657. Affected Volvo owners can contact Volvo customer service at 1-800-528-6586 with recall number RVXX1802. NHTSA’s Volvo recall number is 18V-668. The Volvo recall includes 3,138 model year 2016-2019 VNL tractors. The 48,896 Paccar trucks included in the recall are: 2017-2019 Kenworth C500 2017-2019 Kenworth T600 2017-2019 Kenworth T660 2017-2019 Kenworth T680 2017-2019 Kenworth T800 2017-2019 Kenworth T880 2017-2019 Kenworth W900 2017-2019 Peterbilt 367 2017-2019 Peterbilt 386 2017-2019 Peterbilt 389 2017-2019 Peterbilt 567 2017-2019 Peterbilt 579 2017-2019 Peterbilt 587

54,400 Ford F-series pickups probed by U.S. after tailgate complaints David Shepardson, Reuters / October 18, 2018 WASHINGTON -- NHTSA said Thursday it had opened a preliminary investigation into 54,400 Ford Motor Co. pickups after receiving five complaints that tailgates had unexpectedly opened while the vehicles were in motion. The agency said the investigation was looking into the issue in 2017 model-year F-250 and F-350 Super Duty pickups. NHTSA will investigate to determine if the issue poses an unreasonable risk to safety and whether the agency should seek a recall. In October 2017, Ford issued a technical service bulletin addressing the issue, and found water intrusion in the wire harness as the root cause of tailgate problems, NHTSA said.

Ford to build additional 350 GT supercars, extends output by 2 years Michael Martinez, Automotive News / October 18, 2018 Ford Motor Co. is extending production of the GT supercar by two years and will build 350 more vehicles than it originally planned. Ford previously planned to build 1,000 GTs through the 2020 model year. It now says it will build 1,350 vehicles through 2022. "The response to our Ford GT has been unprecedented, with initial demand outstripping supply by more than six-to-one," Hermann Salenbauch, Ford Performance director, said in a statement Thursday. "By extending the Ford GT production run for a limited period, we're able to maintain the exclusivity of the ultra-desirable supercar while offering the ownership experience to a greater number of customers." Ford said it will reopen order banks for the GT on Nov. 8. Owners for the first two model years have been selected, and production of 2019 vehicles has been designated for applicants who were on the waitlist for the first two batches of supercars. The automaker received more than 6,500 applicants when it first opened order banks. The vehicles are built by Canadian supplier Multimatic Inc. in Markham, Ontario. The supplier ran into trouble early on, hitting just 55 percent of its product target for the 2017 model year.

With that bulbous grille, it looks like the Cheshire cat from Alice in Wonderland. And suddenly the GM-Isuzu 6.6L Duramax is an International brand engine? To differentiate the NAV version from the GM unit, and take advantage of the VW relationship, I might have offered the 4.6L 4-cylinder MAN 0834 (150-220hp) or 4-cylinder Cummins ISB4.5 (150-210hp) as standard, with the 6.9L 6-cylinder MAN 0836 (250-350hp) as an option.

U.S. environmental agency says in talks with Volvo over emissions issue Reuters / October 17, 2018 The U.S. Environmental Protection Agency said on Wednesday it has been in [secret] talks with Volvo over the last few weeks about an issue with catalytic converters causing some of its vehicles to exceed nitrogen oxide emission limits. Volvo warned a day earlier that some of its truck and bus engines could be exceeding limits for nitrogen oxide emissions due to an emissions control component it uses degrading more quickly than expected. The Swedish truckmaker said it could face material costs to deal with the issue largely affecting trucks and buses sold in North America and Europe, its two largest markets, and that it was working with authorities to find a solution. The EPA, in an emailed statement, told Reuters on Wednesday that the agency was aware of the situation, which it said involved Volvo heavy duty trucks. "Over the last few weeks, EPA and the California Air Resources Board (CARB) have been communicating with Volvo about the problem and are now continuing to meet with the company to develop plans to quickly address this situation," the EPA statement said. A U.S. government official briefed on the matter said on Wednesday that regulators do not believe excess emissions are the result of a "defeat device" or intentional misconduct as in the case of Volkswagen AG's excess diesel emissions, but rather is believed to be the result of a faulty component and a recall is expected. Asked why Volvo had waited a couple of weeks before informing the market, a Volvo spokesman said the company needed to determine whether this would be a large issue and it was standard protocol to inform authorities first. "Authorities and legal bodies are normally informed prior to the markets because we inform them even if the problem is very, very small," he said. Volvo did not say when the affected trucks were sold or how many are impacted. It said that all products equipped with the component met emissions limits at delivery. The company sold 51,693 trucks in North America last year and another 115,863 in Europe. EPA and CARB refused to comment about how many trucks were involved, while a spokesman for Volvo said it was too early to know. "We... are working with the company to more fully understand what's going on," a spokesman for CARB said in a brief separate comment, without giving more details.

Thor Trucks, AxleTech announce e-powertrain partnership Commercial Carrier Journal (CCJ) / April 16, 2018 Specialty powertrain manufacturer AxleTech and California-based electric truck upstart Thor Trucks announced Tuesday a partnership to develop a heavy-duty e-powertrain system. The two companies will integrate AxleTech’s e-axle technology with Thor’s proprietary battery technology to create a fully electric commercial vehicle powertrain. “Due to the acute market need for these solutions, we are proud to work alongside Thor Trucks to build the most advanced integrated powertrain components for driveline electrification,” says AxleTech CEO Bill Gryzenia, CEO. Giordano Sordoni, co-founder and COO of Thor Trucks, called the partnership “a significant stride forward in our pursuit to transform the commercial transportation industry.” In July 2018, Thor Trucks announced it would partner with UPS to build and test two fully-electric delivery trucks in the greater Los Angeles area.

Volvo doesn’t know how many North American trucks are affected Transport Topics / October 16, 2018 Volvo Group said it could not yet determine the impact of a faulty component on its North American trucks as it was still evaluating the scope of the problem. “We cannot provide [the number of affected vehicles in North America] because any number is potentially misleading,” Volvo spokesman Claes Eliasson said in an e-mail. “It’s not clear at this point what percentage of the population might experience the issue, and over what time period.”

You do recall that the Ford D3 and D4 platforms were derived from the Volvo P2 platform while under Ford ownership. Ford was like a dry sponge around the Volvo tech it purchased.

It would have been more beneficial if Ford had kept Volvo car.

Volvo's supplier is Eberspacher, who is an extremely reputable supplier. However, I can imagine that they dictated a Volvo-design based on low price. Of course Mack brand trucks have the same Volvo Group components. Scania purchases their after-treatment system from Forest Lake, Illinois-based Tenneco and has no issues.

Volvo warns its engines may exceed emission limits Reuters / October 16, 2018 Sweden’s Volvo said on Tuesday an emissions control component used in its vehicles was degrading more quickly than expected, which could cause engines to exceed emission limits for nitrogen oxides, sending its stock down sharply. The problem is the catalyst converter, Volvo investor relations director Anders Christensson said, refusing to name the supplier or say whether Volvo would terminate the relationship. "In certain applications when the engine is not running hot enough you get condensation water in there and that causes this problem. You get a warning signal in the dashboard saying you're running above nitrogen oxide levels," he explained. Volvo Group, which makes trucks, construction equipment and buses, said the largest volume of potentially affected engines had been sold in North America and Europe, its two largest markets, and that costs to fix the problem “could be material”. The issue could become an added headache for Volvo, which has been working hard to protect profitability after a surge in demand in Europe and North America caused supply chain bottlenecks, inflating costs for raw materials and labour. Volvo’s shares were down 6 percent at 133.60 Swedish crowns at 0722 GMT, making it easily the biggest faller on Stockholm’s blue chip index. Volvo, which sold 143,373 trucks in Europe and North America last year, said it was in the process of informing authorities. A spokesman said Volvo had spoken to authorities in North America and Europe, where emission regulations are strictest, but there were no plans yet to recall any vehicles.

Daimler recalls nearly 20,000 Freightliner, Western Star trucks over steering shaft issue Matt Cole, Commercial Carrier Journal (CCJ) / October 15, 2018 Two separate recalls by Daimler Trucks North America include nearly 20,000 trucks, most of which are severe service, while a recall by Navistar involves around 600 severe service International trucks, according to the National Highway Traffic Safety Administration. The largest of the two Daimler recalls is for improperly installed steering shaft assemblies in approximately 19,754 trucks. Affected trucks include model year 2018-2019 Freightliner 108SD, 2018-2019 Freightliner 114SD and 2018-2019 Freightliner Business Class M2. Daimler says an improperly installed steering shaft assembly can cause a loss of connection between the steering wheel and front wheels. Daimler will notify affected truck owners and repair the assembly if necessary. Owners can contact DTNA customer service at 1-800-547-0712 with recall number FL-791. NHTSA’s recall number is 18V-646. .