Having laboured long and hard over a report chronicling the decline and fall of the North American truck market – due to be published this week by our good friends at Automotive World and representing quite staggering value etc – we were rather hoping to spend the weekend in a semi-reclined position accompanied by some well-chilled Sancerre, and an assortment of cocktail snacks. Then along come Caterpillar and Navistar, and plans change.

What we know is this. Caterpillar is in the cart as far as On-Highway business goes, and needs to do something. The status quo is not an option here. It can either commit to OH business, or it can exit. 2010 represents a moment of truth for the entire North American truck business, but for Caterpillar, it represents a stark decision. It can stay or it can go. ACERT has bombed, and Caterpillar now runs a very poor second in the US proprietary engine market. It tried to develop a JV with PACCAR; it didn't happen. There have been rumours of an approach to DTNA and an attempt to buy Western Star. No obvious movement on this one either. But, however you cut it, CAT has to carry on trying, or check out of the business.

Navistar has been bedevilled by a number of different issues over the past couple of years. In addition to employing accountants lacking somewhat in the ability to count, its relationship with Ford has taken a nosedive – and an expensive, litigious nosedive at that, and it is, in global terms, a very small player, one that is highly dependant upon the cyclical merry-go-round that is the NAFTA truck market.

Navistar’s deal with MAN is one worthy of cautious approval. It gives the company access to a technology that we are convinced is one entirely appropriate for 2010 – namely EGR. This deal also makes MAN happy – it too has volumes worthy more of a cottage industry than a global player, and so the MaxxForce deal can only be viewed as win win for both.

And now the rumours. Navistar has been seen as an obvious takeover play for some time now: there can be very few industries in which a significant player – International has been near the top of the Class 8 sales board throughout he post 2006 downturn – is up for sale. As is Navistar, with Dan Ustian making no bones about the fact.

Obvious suitors would be European: Fiat – either through Fiat Powertrain or Iveco – or MAN. Navistar’s Indian JV partner Mahindra & Mahindra might also be minded to give it a thought, and, as a long shot, so too might Hino. A couple of years back, Navistar seemed to offer Ford a way back to the heavy truck business following the ending of its Class 8 business through the sale of Sterling to DTNA. This now seems unlikely, and Navistar’s pitch for GM’s medium duty business would seem to confirm the end of any meaningful Ford-Navistar relationship. Whatever direction a bid may come from, it seemed unlikely to happen before the middle of 2008, when the Poison Pill instituted by Navistar in order to prevent an unwelcome suitor runs out.

Then along came the Caterpillar business. As we write, there are three distinct rumours doing the rounds. One is that Caterpillar will move in and buy Navistar. The next is that Caterpillar will become its sole engine supplier, whilst the third suggests that Navistar will manufacture the 9900 and 7000 series for sale by Caterpillar as a CAT-badged product.

On the basis of two wrongs rarely making a right, a wholesale acquisition would seem to be a strange move. Navistar’s OH future would seem to be based on its access to a non-SCR EPA10 compliant engine, and ACERT hasn’t proved to be much fun at EPA07, suggesting that an updated version for 2010 is also likely to prove to be a dog. But Navistar is for sale, and CAT needs to do something.

A SOLUS engine supply deal? This would seem to be a very odd move. Only a couple of weeks ago came this announcement, and, for the life of us, we cannot see this one working. Leaving aside the technology benefits inherent with the MaxxForce product, what price the litigation? Navistar signed up with MAN for EPA10 fairly recently, and reneging on this deal would seem to be a move that would not only be costly, but also one best described one of abject stupidity. Of course, the flipside to this argument is one that suggests that MAN could get a medium duty engine out of the deal – which, presumably it could have done before CAT hove into view. Munich lawyers are likely to be sharpening their pencils right about now.

Which brings us to the 9900 / 7000 idea. The International dealers are going to just love this one. Can Navistar afford to shaft its network in such a way? We think not; despite the fact that things are beginning to look up for Navistar, a network in open revolt would be a very bad thing. Add another raft of litigation to the pot.

To our minds, there is too much going on here – gag orders, odd launches and the like - to suggest that this is all mere rumour. Something is going on, but any of the three rumours currently doing the rounds would seem to make no sense at all. Navistar may be CAT’s last shot at staying in the game: PACCAR JVs have come to nothing, and Cummins would seem to be opening up the gap between the two proprietary suppliers.

Again, we say. Watch this space.