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Dec 1, 2007 12:00 PM

A wholly owned affiliate of Navistar International Corp signed a joint venture agreement with Mahindra & Mahindra Ltd (M&M) of India to produce diesel engines for medium and heavy commercial trucks and buses in India.

The joint venture, to be named Mahindra International Engines Ltd (MIEL), will be 51 percent owned by M&M and 49 percent owned by Warrenville IL-based Navistar. The combined investment of the two companies will be $90 million over the next five years.

This marks the second such joint venture with M&M, after a 2005 JV that now makes light, medium, and heavy commercial vehicles for India and export markets. The new company's advanced diesel engines will power the full line of trucks and buses produced by the preceding JV beginning in 2009. Engine components will be sourced locally, going up to 85 percent within two years.

MIEL will build a new plant in India, with production start-up targeted for April 2009. Initial capacity of the greenfield site is projected to be 25,000 units per year, ramping up to 40,000 per year within five years.