Unless you've been on holiday in some remote spot without access even to carrier pigeons or smoke signals, you'll know by now that Navistar International announced on July 6 that it was giving up on "advanced EGR" as its sole engine emissions technology.

Instead it will combine that with liquid-based urea aftertreatment to meet present and future Environmental Protection Agency standards. Early in 2013, the company will field a Maxxforce 13 engine using what it calls ICT+ (in-cylinder technology plus), meaning exhaust-gas recirculation plus selective catalytic reduction (SCR) aftertreatment. A 15-liter MaxxForce engine with ICT+ will follow, and then the 11-liter motor, but no timeline was given for them.

The acknowledgement of failure to make EGR work was only implicit in the webcast press conference called to announce this huge shift in direction, but the reality was clear enough: significant market-share loses and a $172 million loss in the second quarter. Fully $104 million of that went to cover warranty claims for the company's 2010 engines.

There had been speculation (including my own) that Cummins might be involved in this change of direction, but Navistar says it's developing its SCR answer in-house. In fact the company is about to introduce a medium-duty truck in Europe, the DuraStar 4400, which will meet the Euro V emissions mandate using SCR.

Call me crazy, but I'm not willing to dismiss the Cummins idea quite yet. We'll see.

Let's also clarify something about Caterpillar's engines in this context. I've had questions asked about how Cat fits in here, given that its present engines are made by Navistar and re-badged, though the 15-liter model does use Cat's tried and true block. As I understand things, the responsibility for certifying Cat's diesels to EPA standards has always fallen to Navistar, being the manufacturer, which means in turn that future Cat motors will also use the same SCR to be found in MaxxForce engines, starting with the 13-liter model next year. 

It's worth a reminder that all 2010-compliant diesels from all the manufacturers still use EGR, albeit in a less aggressive form than pre-2010 engines, and certainly less so than the "advanced" version that Navistar couldn't make work. SCR is simply an added aftertreatment system. One of the interesting aspects of the MaxxForce re-engineering process will be to see how far they dial down EGR rates.

It's also worth noting that the new ICT+ technology was actually launched last month in a medium-duty truck in the Brazilian market. The point being that Navistar may not have to play quite so much catch-up as people think in coming up with an acceptable SCR system for North America.

There are some commenters who seem to be writing Navistar off, given this engine mess and the substantial losses - financially and otherwise - that have resulted, but hold on. This remains a very big company that does not depend solely on North American truck and engine sales for its livelihood. It has a vibrant military-vehicle business, it's a big player in the school-bus world with a 48% North American market share, and then there are the Monaco recreational vehicle and Workhorse-brand motorhome and stepvan subsidiaries. It's also a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Not to mention a huge aftermarket parts and service presence, nor its deal with Caterpillar to sell trucks and engines in offshore markets.

In fact, foreign markets represent an increasingly large part of the company's business, and its success in partnering with Mahindra in India is quite real, for example. And remember, few other countries outside of North America and Europe present emissions limits quite as stringent as ours, meaning EGR will be quite suitable in many parts of the world.

A couple of months ago Navistar also announced plans to expand its collaboration with Chinese truck maker Anhui Jianghuai Automobile Co. (JAC). They're partnering on new commercial vehicle opportunities like the design, development, manufacturing, and distribution of school buses for the Chinese market. The agreement also calls for the export of light- and medium-duty cabover trucks from JAC in China to Navistar dealers in Brazil.

So yes, Navistar has one mighty big hurdle in front of it in terms of making its engine technology work here in North America and rebuilding a somewhat tarnished reputation, but it's still in the game. And if Volkswagen buys it, which still isn't out of the question, then watch out.