Monday 3 October 2016

VW and Navistar to create new ‘engine platform’

The deal between Volkswagen AG and Navistar International Corporation will not be ‘closed’ until early next year but in the meantime the two companies are working on a ‘new engine platform’.
At this stage, it is difficult to judge the sizes of engines which will form the basis of the ‘new platform’ due to bow in 2021.
Five years is about the right time to develop a new engine platform, but Volkswagen already has a range of engines from MAN in Nurnburg, Germany (as well as Scania in Sweden). These MAN engines are the 10.5-5-litre, 12.4-litre and 15.2-litre I6 units, all of which use compacted graphite iron (CGI) cylinder blocks and cylinder heads made by Tupy SA in Brazil. Scania has another engine range. Two of the MAN engines are only 10 years old. Interestingly, Navistar's MWM subsidiary in Brazil pre-machines the CGI components from Tupy before forwarding them to the main engine plant in Huntsville, Alabama. Tupy of course uses SinterCast's foundry process control technology.
Sources says that the two firms have been talking for over a year, so Navistar International Corporation chief executive office, Troy Clarke, clearly has had this issue on his mind for a while as a ‘long stop’ to aid the recovery of the business he came in to ‘save’. Also, for many months past when he was happy to take engines from Cummins Inc, he was also striking a new 'engine platform' deal with Volkswagen.
Cummins Inc. bosses in Columbus, Indiana likewise unexpectedly put a gloss on the deal. Navistar is possibly Cummins’ biggest single customer. The Cummins bosses argue that with Volkswagen's staff soon to be on Navistar’s board, the new deal could enhance the Lisle, Illinois's business 'turnaround' and, per se, increase overall truck sales.
Cummins bosses think that if Navistar can grow its sales then, providing Cummins can share in the 'boost' and retain its share of Navistar business, then it too will feel the benefit of the VW-Navistar deal.
On the other hand, if the ‘new platform’, about which Clarke is ‘so excited’ and the two new partners can achieve their ‘alignment’, proves to be a world-beater, then this could spell big trouble for Cummins. Were the Cummins bosses feigning optimism when they heralded benefits of the new joint venture?
If a truly new engine family is developed – one that can be made in Europe and North America – the question has to be asked: will the combined teams of heavy duty diesel engineers from Volkswagen and Navistar settle on using compacted graphite iron (CGI) cylinder blocks again?
Given that VW will have only a 16 per cent stake in Navistar it could be argued that the same percentage could apply to the engineers and managers that will round the table to evolve the ’new platform’.
On the other hand, it could be argued that with its combined wealth of knowledge and expertise in diesel technology from MAN, Scania and Volkswagen, German and Swedish engineers could outnumber those from Navistar.
After all the weak card in Navistar’s hand, and one that Troy Clarke must surely acknowledge, is that when the time came for Navistar’s powertrain engineers to step up to the table with their new MaxxForce engines (when the company was under the leadership of Daniel Ustian) they were not strong enough to overturn the boss’s diktat to adopt an EGR-only solution.
MAN’s engineers knew the perfect solution; they had implemented it on European engines. But Navistar had to go its own way with driver Ustian at the wheel, with the result they nearly brought the company to its knees.
Troy Clarke knows that. It explains why he is keen for Volkswagen to help lead Navistar out of the wilderness. He cannot do it alone.
If success happens and Navistar does experience a ‘turnaround’, then Volkswagen will want all Navistar’s trucks to carry ‘new platform’ engines.
VW will have no interest in seeing Cummins increase its engine take. After all, every Cummins engine sold in a Navistar truck is a lost sale to VW! And the German shareholders will not want that. Full stop.

Meanwwhile, a of this comes at a time when the North American Class 8 heavy duty truck business continues to flounder. Provisional results show that only 13,900 Class 8 vehicle orders were taken in September – usually the weakest net order month of the year. Seasonally adjusted the figure upticks to 16,100 units. Even so, the September figure is 28 per cent below the same month last year showing that truckers are still struggling to balance excess capacity in the context of low freight growth.

1 comment:

Alan Bunting said...

There's an intriguing twist to the Volkswagen-Navistar powertrain saga. Cummins has been supplying VW with truck diesel engines in South America for many years. The 8.3 litre ISC and 8.9 litre ISL have been available in VW's Brazilian high-cabbed Constellation heavy truck range since its launch in 2005.
A further twist is that Constellation buyers can also specify engines from Navistar's Brazilian subsidiary MWM. And a third engine option for those buyers is an engine dubbed the NGD 370, which is manufactured by MWM but said to be 'engineered by Volkswagen'. This 'mystery' engine is in fact basically a long-established Navistar design - the 9.3 litre unit now variously designated N9 or N10 in the US, updated with variable-geometry turbocharging and other refinements. However, because it has to meet the less stringent emission rules obtaining in South America, it employs EGR alone to control NOx.