Class 8 Engine Sales Dive 21%

This story appears in the Aug. 12 print edition of Transport Topics.

Class 8 engine installations in North America plummeted during the first half of 2013, dropping 21.2% to 119,057, WardsAuto.com reported.

Placement of engines — which include power plants made in the United States, Canada and Mexico for domestic consumption and export — fell more sharply than U.S. heavy-duty truck sales, which have declined 13.5% over that same period to 85,840.

“The industry built way too many trucks during the first half of 2012. Since then, it’s been a process of working down inventory,” said Kenny Vieth, president of ACT Research Co.

Aggregate North American Class 8 truck inventory fell 19% to 51,000 vehicles on June 30, from 63,000 units the year before, Vieth said, adding that truck makers filled all of their sales and cut production even further by drawing down inventories by 12,000 heavy-duty trucks.

Among the engine makers, independent manufacturer Cummins Inc. maintained its market lead with a 41.1% share, although it was down from 42.2% last year.

“The market has not been as strong as expected. Cummins’ performance is in line with the market change,” said Lori Thompson, the company’s vice president of truck and bus business.

The number of Cummins engines installed dropped to 48,956 in this year’s first half from 63,802 in the first six months of 2012. In its second-quarter earnings report, Cummins said the North American truck market led to a decline in the company’s total net income.

Detroit and Mercedes-Benz, the two engine brands of Daimler Trucks North America, captured a larger slice of the smaller pie as its combined market share rose to 25.7% from 21.7% even as the number of engines installed dropped to 30,621 from 32,772.

Volvo Group’s Volvo and Mack brands gained to 17.6%, combined, from 16.5%, while units installed declined to 20,954 from 24,934.

Navistar Inc., manufacturer of MaxxForce engines for its International trucks, lost the most share, dropping to 8.3% from 14.3%, as engine placement plunged to 9,837 units from 21,536. The company switched emissions technologies late last year, which hindered sales. 

Paccar Inc., parent of Kenworth Trucks and Peterbilt Motors, gained two percentage points, rising to 7.3%. Paccar was the only company to sell a larger number of engines year-over-year, rising to 8,687 from 7,964.

Most manufacturers declined to talk with Transport Topics about the results.

In addition to the inventory adjustment, ACT said export sales from North America have fallen off more severely than truck sales to buyers on the continent.

ACT records show first-half sales falling by 14% in the United States and 12% in Canada, but by 51% in the export market. ACT said.

The four large truck-making corporations — DTNA, Navistar, Paccar and Volvo — make engines in-house for their own vehicles. Since Caterpillar Inc. left the on-highway market at the end of 2009, Cummins is the last remaining independent engine maker.

Cummins’ biggest first-half Class 8 customers, according to the Ward’s report, are Kenworth, with 17,157 engines; DTNA’s Freightliner Trucks, 12,138 units; Peterbilt, 9,423; and Navistar, 7,788. Navistar had been avoiding Cummins until December when it became a major buyer of ISX15 engines in the wake of its switch to selective catalytic reduction technology.

The Ward’s report said Mack was the only heavy-duty truck maker not to use any Cummins engines, but Mack has said publicly it is using Cummins ISX12 G natural-gas engines to supply UPS Inc.

Paccar, maker of the MX-13 engine, used 8,687 during the first half, up from 7,964 during the same time in 2012. Of those installed this year, 4,436 went into Kenworths and 4,251 into Peterbilts.

Stock analyst Ann Duignan, who follows Cummins for J.P. Morgan Securities, said Navistar is splitting its heavy-duty truck sales this year between Cummins and its own MaxxForce engines. Cummins supplies 15-liter models while Navistar provides 13-liter equipment.

Cummins still gets a slice of Navistar’s 13-liter business, though, in that it provides SCR aftertreatment for the MaxxForce engines. It also supplies components to Paccar for its engines.