Description of Navistar International's Business Segments
TRUCK The truck segment manufactures and distributes a full line of diesel-powered
trucks and school buses in the common carrier, private carrier, government/service,
leasing, construction, energy/petroleum and student transportation markets. The
truck segment also provides customers with proprietary products needed to support
the International'' truck and the IC'' bus lines, together wi th a wide selection
of other standard truck and trailer aftermarket parts. The company offers diesel-powered
trucks and school buses because of their improved fuel economy, ease of serviceability
and greater durability over gasoline-powered vehicles.
The truck and bus manufacturing operations in the U.S., Canada and Mexico consist
principally of the assembly of components manufactured by its suppliers, although
the company produces its own mid-range diesel truck engines, sheet metal components
(including cabs) and miscellaneous other parts.
The engine segment designs and manufactures diesel engines for use in the company's
Class 6 and 7 medium trucks, school buses and selected Class 8 heavy truck models,
and for sale to original equipment manufacturers (OEMs) in the U.S., Mexico
and Brazil. This segment also sells engines for industrial and agricultural
applications. In addition, the engine segment provides customers with proprietary
products needed to support the International' engine lines, together with a
wide selection of other standard engine and aftermarket parts. Based upon information
published by R.L. Polk & Company, diesel-powered Class 5, 6 and 7 medium
truck and bus shipments represented 95% of all medium truck and bus shipments.
The financial services segment provides retail, wholesale and lease financing
of products sold by the truck segment and its dealers within the U.S. and Mexico
as well as finances the company's wholesale accounts and selected retail accounts
receivable. The foreign finance subsidiaries' primary business is to provide
wholesale, retail and lease financing to the Mexican operations' dealers and
retail customers.
ENGINE AND FOUNDRY
Navistar is the leading supplier of mid-range diesel engines in the 160-325
horsepower range according to data supplied by Power Systems Research of Minneapolis,
Minnesota. The company's diesel engines are sold under the International' brand
as well as produced for other OEMs, principally Ford.
Navistar has an agreement to supply its 6.0L electronically controlled diesel
engine to Ford through the year 2012 for use in all of Ford's diesel-powered
super-duty trucks and vans over 8,500 lbs. gross vehicle weight (GVW) in North
America. Shipments to Ford account for approximately 96% of the engine segment's
6.0L shipments.
FINANCIAL SERVICES
NFC is a commercial financing organization that provides wholesale, retail and
lease financing for sales of new and used trucks sold by the company and its
dealers in the U.S. NFC also finances the company's wholesale accounts and selected
retail accounts receivable. Sales of new products (including trailers) of other
manufacturers are also financed regardless of whether designed or customarily
sold for use with the companys truck products. As of the year ended October
31, 2004 and 2003, NFC provided wholesale financing for 95% and 96%, respectively,
of the new truck inventory sold by the company to its dealers and distributors
in the U.S.
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