Volvo AB announced today that it has broken off talks to supply large engines for Navistar International Corp.'s International brand trucks, saying that terms of the agreement weren't met. The two companies stopped negotiations after deciding it wasn't possible to meet the conditions of the letter of intent.

Volvo CEO Leif Johansson said in May it had signed long-term agreement to supply Navistar with 12- to 13-liter engines. Johannson said the engines would have been produced at Volvo Powertrain's plant in Sweden, and that production will eventually be shifted to a North American plant.

"As it has not been possible to fulfill the conditions outlined in the Letter of Intent, the parties have decided to cease negotiations," Volvo said in a released statement.