“Cummins is well positioned to meet the competition of North American truck makers offering vertically-integrated packages of their own trucks and engines.” So says Tom Linebarger, recently named as the new president and CEO of the Columbus, Indiana based diesel engine manufacturer. Linebarger takes over next January when current supremo Tim Solso retires.
Of course it is part of a chief executive’s role to be optimistic. But many observers of the North American truck and bus manufacturing scene would question Cummins’ market position in the longer term. Linebarger’s remarks come after a decade or so of massive upheaval in heavy-duty truck engine sourcing in North America. Until the mid-1990s, US heavy truck makers bought in virtually all their engines, from the three long-established all-American suppliers: Caterpillar, Cummins and Detroit Diesel. The only exception was Mack, which offered its own engines as an option.
Today every heavy-duty truck maker in North America, except Navistar (International), offers Cummins diesel power as an option.
European-style powertrain ‘self sufficiency’, though always taken for granted in high-volume light/middleweight truck manufacture by Detroit’s Big Three car manufacturers, was an alien concept for class 8 truck builders. The acquisition by Daimler-Benz of its first minority stake in Detroit Diesel in the mid 1990s marked the beginning of a trend – under largely European influences – towards the use of in-house engines. The truck makers began to appreciate the attractions of vertical integration, most obviously the added-value potential of in-house engine manufacture plus the captive aftermarket in parts and service.
Today every heavy-duty truck maker in North America, except Navistar (International), offers Cummins diesel power as an option. But for Daimler (Freightliner and Western Star), Volvo (including Mack) and Paccar (Kenwoth and Peterbilt), the prime marketing thrust, in the shape of special finance packages and extra keen pricing, is now behind their own – albeit European designed – engines.
Clearly all three, having invested heavily in new stateside engine assembly and manufacturing facilities, would dearly love to become 100% vertically integrated, like their European counterparts. That would mean no longer listing a Cummins option. But it is clear from Linebarger’s comments that he knows his company holds the ‘balance of power’.
If Freightliner, for instance, was unilaterally to discontinue the Cummins ISX option in its class 8 tractors, there would be a high risk of customers defecting to one of its two competitors maintaining Cummins engine availability.
There are still a sufficient number of truck-buying customers with a strong loyalty to Cummins diesels – in some cases going back decades – which the OEMs cannot ignore. If Freightliner, for instance, was unilaterally to discontinue the Cummins ISX option in its class 8 tractors, there would be a high risk of customers defecting to one of its two competitors maintaining Cummins engine availability.
Navistar has shown over the last two years that it does not need to offer Cummins power in order to maintain its class 8 market share. But there are other factors involved, relating to EPA emission law compliance and Navistar’s perceived ability to use the revenues from its huge military truck contracts to hold down the prices of its MaxxForce in-house engined heavy commercial market chassis.
Linebarger says he sees “verticalisation less as a trend and more as a pendulum swinging back and forth”. But few observers outside Cummins would envisage that pendulum swinging back towards increased engine outsourcing.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Alan Bunting has a background in engineering, and has been writing on commercial vehicle and powertrain related topics since the 1960s. He has been an Automotive World contributor since 1996.
The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute an Expert Opinion piece, please contact editorial@automotiveworld.com
