Friday 6 September 2013

Navistar set for more bought-in engines?

The latest twist in developments at Navistar International (see Navistar ditches DT 466 in Class6/7 trucks) suggests the North American truck maker is moving away from vertical integration.

At a time when Class 8 rivals Freightliner, Paccar and Volvo are trying to encourage customers to buy in-house engines, Navistar appears to be edging in the other direction when it began to specify the ISX 15-litre engine from Cummins Inc.

There was a time not so long ago when Navistar was embracing Caterpillar’s 15-litre engine as the way forward towards creating the MaxxForce 15. But this adventure had to be scrapped when it became clear that an EGR-only strategy for the company’s engines was a ‘no go’ area as a means of meeting emissions requirements.

We now have the news that Navistar will adopt the Cummins 6.7-litre engine in its Class 6 and Class 7 DuraStar trucks, in favour of the venerable in-house DT466, implying on the one hand the death of the DT466 (and all the implications of that) and the potential end of vertical integration. Navistar elected to use Cummins's SCR technology for MAN-derived MaxxForce 11 and MaxxForce 13 engines. Navistar seems very close to Cummins. Why did the company not go to MAN for the SCR technology it would add to the MAN-derived engines? That would have seem the obvious route to take. Or is that just tto simple for words?

Customers of Class 6 and Class 7 medium duty truck are perhaps less discerning in their choice of engine; they are more concerned with the financial returns the truck will deliver, so fuel economy and durability are vital matters.

When it comes to Class 8, as Freightliner (Daimler AG), Kenworth and Peterbilt (Paccar) and Volvo/Mack have shown, it is much harder to convince potential customers to go down the route of using in-house engines, even though for the truck builder this is the most economic route to adopt. That such engines are European designed may be a contributory factor.

Each of these North American truck makers has tried to persuade customers to use Mercedes, Daf and Volvo engines respectively with varying degrees of success. But at the end of the day, operators of such vehicles like to choose their engine with as much enthusiasm as they will have a preference for cabs, suspensions and so on.

In March this year, Eaton and Cummins unveiled a new powertrain package for the North American line-haul and regional haul truckload markets that could deliver three to six per cent fuel-economy improvements over separately-specified Cummins/Eaton engine-transmission pairings that were available previously suggests a coming together of component suppliers to protect their long-term interests. By joining forces,  the two American powertrain suppliers are clearly in a better position to resist the powerful, European-driven, shift towards vertical integration.

How are such fuel economy gains possible?  The advent of electronic powertrain management – initially of engine fuelling alone, but later by way of turbocharger control and, more crucially, automated mechanical transmission (AMT) shifting, that matching of the two crucial elements of the powertrain combination has become ever more sophisticated. 

Engine and transmission can now communicate with one another in a manner that hitherto was not possible.  Such communications benefit fuel economy and/or performance, even to the point that customers can select programs, depending on their operating requirements.  Thus, fleet owners can opt for permanent economy mode, while the owner-driver with his switch in the cab, can trade off some fuel saving for better acceleration when needed.

This ‘coming together’ of engine maker and transmission supplier through the advent of ‘digital technology’ could have major implications for firms like Navistar. Whether Navistar will be affected by this remains to be seen, but as the truck maker and Cummins Inc. grow ever closer and depend increasingly on one another, all kinds of opportunities may unfold

Extending the line of vertical integration thinking further throws up another, seemingly outrageous possibility. Because of vertical integration, Cummins could lose so much of Daimler’s, Paccar’s and Volvo’s business that it might cut its losses and acquire Navistar International outright, given that troy Clarke’s turnaround plan does not prove achievable. In that way, Cummins Inc. would suddenly become a truck and engine maker, and a vertical integration champion.

Whatever happens next as Navistar’s supremo Troy Clarke draws up his plans for the future, it would seem that Navistar is set to make increasing use bought-in engines, and this surely will have implications for Navistar’s three engine plants as no doubt we shall hear in the months to come.   

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