WARRENVILLE, Ill. (AP) -- Navistar International Corp. and Ford Motor Co. agreed to end their diesel engine supply pact but continue collaborating on other projects as part of a deal intended to settle their ongoing litigation, the companies said late Tuesday.
The companies will end their current diesel engine supply agreement effective Dec. 31, 2009. Dearborn, Mich.-based Ford will also make an undisclosed payment to Navistar.
They will continue to collaborate on a range of other projects, including existing joint ventures that will continue to provide F-650 and F-750 medium duty trucks and parts support for other Ford products. Navistar will acquire additional equity in those ventures.
Ford and Navistar also will continue their diesel engine supply relationship in South America.
In January 2007, Ford sued Warrenville, Ill.-based Navistar, alleging the engine and truck maker failed to pay its share of recalls and repair costs from the diesel engine used in the 2002-2007 model years. Navistar then sued the automaker for alleged breach of contract and refiled the lawsuit in 2008 after mediation failed to settle the dispute.
Navistar Chairman, President and Chief Executive Dan Ustian said it is in the companies' best interests to resolve the conflict and continue their relationship in other areas.
"The next phase of our relationship is consistent with Navistar's strategy to diversify our customer base, while continuing to provide value to both companies through our existing joint ventures and our supply agreement in South America," Ustian said.
Navistar shares fell 30 cents to $27.90 in aftermarket trading, after losing 60 cents, or 2.1 percent, to $28.20 during the regular session. The stock has traded between $15.24 and $79.05 during the past 52 weeks.
Ford shares fell 16 cents, or 6.1 percent, to $2.48 on Tuesday. The stock has traded between $1.01 and $8.79 during the past year.