UPDATED: Truck recall roils Navistar stock price

Shares of Navistar International  Corp. (NAV) were buffeted today by the recall of over 7,000 late-model ProStar and TranStar Class 8 trucks that might have a braking-related issue, contends an analytical post on the investment-research site SeekingAlpha.com.

At one point this morning, the OEM’s stock was trading at $26.92-- roughly 10% off its opening price.

The truck recall was first issued last November, but was expanded earlier this month to include 1,000 more units. According to Navistar, the total number of trucks affected now stands at 7, 756. 

The truck and engine builder was also hit with bad financial news last week. Standard & Poor's (S&P) Ratings Services downgraded its credit from B to B- and maintained a “negative outlook” for the OEM.   S&P also adjusted Navistar's “business risk profile” from “weak” to vulnerable.”

According to an analyst’s post on Nasdaq.com, S&P is “cautious about the liquidity of the company and expects that Navistar will generate wider losses in future.” The analyst added that Navistar’s shares had slipped “around 9.1%” after the company announced its fiscal 2013 2Q earnings on June 11th.

The recall notice posted by  the National Highway Traffic Safety Administration (NHSTSA)  affects “certain model year 2012-2013 International brand ProStar and TranStar commercial trucks, manufactured from August 01, 2011, through July 10, 2012, and equipped with front brake linings listed as feature codes 0504501, 0504504, or 04EWM.”

NHTSA said the recall was issued because S-Cam tube bracket assemblies on the steer axles of these trucks may fracture.

“Brake assembly fractures may result in an inoperative brake on the affected wheel,” stated the agency. “This will cause the vehicle to pull to one side unexpectedly during braking and/or increase the stopping distance. Either result may increase the risk of a vehicle crash.”

According to NHTSA, Navistar has notified all affected owners about the defect and the “remedy is expected to be available in August 2013.” That will involve dealers replacing the S-Cam tube bracket assemblies, free of charge.

The agency said Navistar’s number for this recall is 12530 and that truck owners may contact the OEM regarding the recall at 800-448-7825 or NHTSA via its Vehicle Safety Hotline at 888-327-4236.



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