Volvo and Navistar have dropped a plan for Volvo to supply 12-liter engines to Navistar's International Truck and Engine Corp.

In May, Volvo and Navistar signed a letter of agreement for Volvo to supply engines to Navistar for its International Class 8 trucks. The details were still to be negotiated, and last week, the two companies announced they had discontinued those negotiations.
Cummins, however, signed a long-term extension of an agreement with International to supply ISM engines. The current agreement expires in 2002; the length of the new deal was not disclosed.
Cummins said the agreement bolsters its strategic relationship with International by providing a full line of heavy-duty truck engines that will meet more stringent emissions requirements starting in October 2002. International produces its own line of medium-duty engines.
Under the scuttled Volvo-International agreement, the engines were to have been produced initially at Volvo Powertrain's plant in Skovde, Sweden, with eventual movement of the engine production to North America.
At the time of the announcement of the deal, Navistar said the deal would "ensure that International customers and dealers have access to a 12- to 13-liter Class 8 engine" in the light of stricter emissions standards and industry consolidation.
According to last week's announcement, negotiations were called off because "it has not been possible to fulfil the conditions outlined in the Letter of Intent."