SAN ANTONIO – Ford Motor Co. officials here say the auto maker’s legal dispute with engine maker Navistar International Corp. will not affect supply of 6.4L PowerStroke diesels for use in ’08 Super Duty F-Series pickups.

In a recent legal filing, Ford alleges Warrenville, IL-based Navistar owes it money under an agreement to share engine warranty costs, which it says Navistar has failed to pay. Ford also is suing over the price of the engines, which it says was escalated beyond an agreed-upon price.

The auto maker is seeking reimbursement equal to what it says it overpaid for the engines and for financial obligations owed to it by warranty claims regarding the previous-generation 6.0L diesel engine.

Navistar says in the lawsuit Ford’s claims are “totally without merit,” and the company “intends to vigorously respond in court.”

The argument now is escalating, with Ford taking the unorthodox move of subtracting the amount of money it says Navistar owes it from the agreed-upon price for the diesel mills, a report in the Chicago Tribune says.

Navistar reportedly is threatening to stop supply of the engines until Ford pays the full amount.

Despite the heated controversy between the two companies, Mark Fields, president-The Americas, says he doubts Navistar will stop supplying the engines, but if it does, Ford has a contingency plan.

“I would hope it doesn’t come to that, but clearly we have an ample supply of engines,” Fields tells Ward’s. Even if Navistar should withhold engines, “we have legal means of addressing that and keeping the supply going as we focus on solving the commercial needs.

“But we have to solve (the legal issues),” Fields adds. “And we have to solve them in a manner where we have resolution, and not let this thing linger.”

Ford officials are adamant the new 6.4L diesel supplied by Navistar is of topnotch quality, although they admit the earlier 6.0L did have quality issues in the beginning, which led to higher-than-expected warranty costs.

“There were some issues at the start up of the 6.0L, for sure. You can’t ignore that,” Ben Poore, Ford Div. car marketing chief, tells Ward’s.

Poore says the quality issues affected diesels installed in the ’03 and ’04 Super Duty pickups, but the problems were addressed quickly. “Now they’re bulletproof,” he says of the engines.

Ford does not expect quality issues with the new 6.4L diesel, Poore says. “The difference now is we put over 10 million miles (16 million) of testing on the 6.4L. We’ve put them into real world situations, not just the dyno testing that’s required in cold weather.”

The legal wrangling has had no affect on engineers from both companies assigned to the 6.4L program, Enio Gomes, program manager- PowerStroke program, says.

“We’ve had a close relationship during the design and development and we still do,” he says. “ (The lawsuit) doesn’t affect us on the technical side. Our relationship is very good.”