Thursday 29 November 2012

A more aggressive Torotrak?

“The time is now right for us to adjust our approach to one of more aggressive, accelerated growth in order to capitalise on the substantial opportunity ahead that will allow us to introduce our clean technology into mainstream commercial and passenger vehicles world-wide,” Jeremy Deering, chief executive of Torotrak plc, told us today, after announcing the company’s latest half-year results.

This suggests that following the departure of former chief executive, Dick Elsy, Deering’s arrival will herald an emphatic change of direction; one that aims to steer the business in a direction that will bring returns more quickly than before.

With a period-end cash balance of £10.7 million, Deering said Torotrak would now “put its hands in its pockets” to push forward more aggressively a number of its programmes.
Torotrak has three main product areas: infinitely variable transmissions (IVTs), MKERS or mechanical energy recovery systems and V-Charge, an induction boost system. Together the value of the latter two lines is roughly equivalent to that of the IVT business, according to Deering.  At the moment IVTs are directed principally at commercial vehicles and off-highway applications.

On the V-charge front, Deering expects to spread the technology across four platforms, from small cars like the Renault Clio, into sports utility vehicles (SUVs) with 1.6-litre engines, premium vehicles that might require a two-stage device, and one other.
The aim is to build more prototypes and develop simulation tools with the aim of spreading wider an understanding of the performance and economy benefits.  There is an aim too to break the supply route issue: OEMs trying out the system want to know if there is a Tier 1 supplier standing in the wings; and Tier 1 suppliers want to know if Torotrak has an OEM customer lined up.

To achieve this Torotrak is looking at a ‘shared-manufacture production route’ where large numbers (up to 20,000) of V-Charge systems can be built.

On MKERS, Torotrak hopes to have a system in a vehicle ion 2013. This most likely will be a bus and based on a flywheel system linked to an IVT. On KERS, Torotrak has been working with both Ricardo plc and Flybrid Automotive Ltd. Both of these companies have a different approach to KERS and Torotrak claims to enjoy a good relationship with each.

From this it would seem that Torotrak has focused on buses as the most likely way forward, at least in the short term. Certainly, Torotrak engineers are taking a much deeper interest in bus applications than previously as they discuss the potential with operators.

The third leg of the Torotrak stool remains the IVT and in this respect heavy vehicles offer greatest potential for growth. Here, high fuel costs and high torque requirements point firmly in the direction of IVT.

In this respect, the next major commercial vehicle milestone will occur in the first quarter of the 2013 calendar year, though Deering will not say what is this milestone.

Licencing will remain a layer of value to Torotrak, but not one on which business growth depends; this suggests Deering will aim Torotrak to develop its capability to supply products that contain its core technologies, and boost its advanced engineering services.

At the same time, as the brief of engineers is widened, new transmission technologies could emerge and yet reinforce the company’s basic ethos.