December 19, 2017 / 7:03 PM / a year ago

INTERVIEW-Navistar aims to win back more former customers in 2018 -CEO

DETROIT, Dec 19 (Reuters) - After posting its first full-year profit in six years, Navistar International Corp aims to boost margins in 2018 and use a range of new products to lure back former customers who abandoned the U.S. truck maker following a costly emissions debacle, the company’s top executive said on Tuesday.

“There are still customers out there we haven’t spoken to for a long time, Chief Executive Troy Clarke told Reuters. “Quite frankly we’re making great inroads with those and that’s a significant opportunity for growth as we move into 2018.”

Earlier Tuesday, Navistar posted profit and revenue for its fiscal 2017 fourth quarter ending Oct. 31 that beat Wall Street estimates. The company’s shares rose more than 9 percent.

Navistar has spent years under CEO Clarke working to recover from a disastrous bet it made on a costly proprietary smog-reduction system. The emissions-related debacle sent Navistar’s warranty expenses skyrocketing even as sales tumbled.

In June Lisle, Illinois-based Navistar launched a new 13-liter diesel engine model Class 8 truck, 18-wheelers that haul freight across the country. The emissions mess hurt sales of this business segment. Navistar’s share of that market jumped from 3 percent in June to 12 percent by September.

A new truck engine providing 4 percent better fuel economy than its competitors has also helped, Clarke said. Clarke said in fiscal 2016 Navistar had two deals where it sold more than 500 trucks and this year have had six so far “and the buying season has really just started.”

Navistar has more new products coming to market at a time when orders for Class 8 highway trucks are on an upswing. For 2017, North American industry orders are expected to hit a little over 200,000 and Navistar estimates they could hit up to 250,000 in 2018.

Volkswagen AG agreed last year to buy a 16.6 percent stake in Navistar. The companies jointly plan to launch an electric medium-duty truck in North America by late 2019.

They will also collaborate on the next generation of “Big Bore” diesel powertrains, which Clarke said should hit the market in 2021.

“We’re in the middle of a new product barrage that should give us a shot in the arm well past 2018,” he said.

VW and Navistar also have a joint procurement strategy to save $500 million over five years. Clarke said the plan has exceeded targets so far, but has not been reflected in results yet.

“Those are all yet to come, so if you like the cake you’re going to love the icing,” he said. (Reporting by Nick Carey; Editing by David Gregorio)

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