* Q4 revenue slumps 17.1 pct
* Says 2017 revenue would be similar to 2016
* Shares fall as much as 11.59 pct in morning trade (Adds background, CEO and analyst comments, shares)
By Arunima Banerjee
Dec 20 (Reuters) - Navistar International Corp posted its seventh straight decline in quarterly revenue, hurt by weak sales of its heavy-duty trucks, and it said industry conditions would challenge its results in early 2017 before improving in the second half.
The truckmaker's shares fell as much as 11.59 percent to $26.25 in morning trading on Tuesday.
Heavy-duty truck orders have been declining as trucking companies adjust their fleets amid lackluster retail sales and industrial output in the United States.
Companies such as Cummins Inc and Goodyear Tire & Rubber Co have also been hit by a fall in U.S. heavy-duty truck production.
Navistar expects 2017 class 8 industry volumes to range between 190,000 and 220,000 trucks while class 6, 7 and buses would total 305,000 to 335,000 vehicles, Chief Executive Troy Clarke said on a conference call.
Orders for Class 8 highway trucks - the 18-wheelers that haul freight across the country - tumbled 46.5 percent in October versus the same period a year earlier, according to preliminary data from industry forecaster FTR. (bit.ly/1UqhG1Z)
"It (truck cycle) will begin to recover as the industry meets new and well-performing trucks," Clarke added.
The company said its 2017 revenue would be similar to 2016.
"The outlook bakes in continued industry weakness through the first half of 2017," Jefferies analyst Stephen Volkmann wrote in a client note.
Navistar said it would begin manufacturing General Motors Co's cutaway model G van next quarter and added that it was making "good progress" on completing an alliance with Volkswagen AG.
Volkswagen in September agreed to an engine technology and purchasing alliance with Navistar and bought a 16.6 percent stake in the company.
Navistar, which also makes school buses and dump trucks, said its cash on hand decreased to $804 million from $912 million a year earlier.
Lisle, Illinois-based Navistar, once a leading maker of truck engines, is in the process of turning itself around after struggling with a costly and unsuccessful smog-reduction system, which did not meet regulatory standards.
The emissions-related debacle sent the company's warranty expenses sky-rocketing even as sales tumbled.
Navistar's net loss attributable to shareholders narrowed to $34 million, or 42 cents per share, in the fourth quarter ended Oct. 31 from $50 million, or 61 cents per share, a year earlier. (bit.ly/2hm8xdW)
Revenue fell 17.1 percent to $2.06 billion.
Up to Monday's close, Navistar's shares had more than tripled this year.
Reporting by Arunima Banerjee in Bengaluru; Editing by Anil D'Silva and Martina D'Couto