CHICAGO (Reuters) -- Ford Motor Co. and Navistar International Corp., which have been locked in a dispute over a diesel engine supply contract for several years, said on Tuesday they had reached a settlement that brings the legal fight to an end and effectively dissolves a 30-year partnership.
In a joint statement, the two companies said they had reached an agreement to "restructure their ongoing business relationship and settle all existing litigation between the companies."
Navistar is the parent of International Truck & Engine Corp.
They said Navistar's current contract to supply diesel engines to Ford would not continue beyond year's end, ending a relationship between the two companies that began in 1979 but broke down in recent years over the development of a next-generation for Ford's F-150 pickup trucks, a top-selling vehicle in the U.S. market.
The current diesel engine supply contract, the one dating back to 1979, will end effective December 31, 2009.
As a result of the settlement, Ford will make an undisclosed payment to Navistar.
Ford and Navistar said they would continue their diesel engine supply relationship in South America.
Navistar had claimed in its lawsuit that Ford planned to produce a 4.4-liter diesel engine for the F-150 on its own, a move that it said violates the contract with Navistar. The suburban Chicago company claimed it had spent millions of millions of dollars to develop a next-generation diesel engine for Ford code-named "Lion" for use in the pickup trucks and other vehicles and sought hundreds of millions of dollars in damages from the automaker.
Separately, the two sides had sued each other over pricing and warranty claims related to the current run of diesel engines Navistar has supplied for Ford's F-Series trucks.
Under the settlement announced Tuesday, Ford and Navistar said they would continue to collaborate on a number of fronts, they said, including their Blue Diamond Truck joint venture, a partnership announced back in 2001 that builds medium duty commercial trucks and supplies truck and diesel engine parts to dealers.
Navistar ranks No. 52 on the Automotive News list of the top 100 global suppliers with estimated worldwide sales to automakers of $3.30 billion in 2007.
