OEMs Continue to Nip at Cummins’ Engine Lead

This story appears in the Feb. 9 print edition of Transport Topics.

Truck manufacturers continued to make gains selling their own engines during 2014, as the total number of engines placed into Class 8 trucks rose 21.3%, WardsAuto.com reported.

Of the nearly 295,000 engines put into heavy-duty vehicles in North America, almost 182,000 were built and installed by the same OEM that built the truck.

Cummins Inc. reported last week it sold 122,100 heavy-duty truck engines in 2014 — a 15.8% increase over the 105,400 sold in 2013.

The Columbus, Indiana-based company’s leading market share slipped to 38.4% from 40.4%, while Daimler Trucks North America, Volvo Group and Paccar Inc. posted increases. However, Navistar International Corp.’s share declined as it used more Cummins engines in its International trucks, Ward’s reported.

“OEMs are continuing to push vertical integration,” mainly 13-liter engines, and are “having some success where applications are warranted,” said Lawrence De Maria, co-leader of global industrial infrastructure at William Blair & Co.

Cummins’ slight decline in market share “was well within expectations,” De Maria said, adding that it is “still the leader and the de facto standard” in engines.

“In the sweet spot for the big-bore engines, Cummins continues to dominate,” he said. “People expect some attrition over time in their market share but no dramatic drop-off.”

Three OEMs posted double-digit percentage increases with their own engines, exceeding last year’s 19.2% increase in U.S. retail truck sales.

DTNA’s share rose to 27.5% from 25.9%. Its Detroit brand engines, coupled with a smaller number of Mercedes-Benz Class 8 engines, totaled almost 63,000 — a 28.7% increase — in its Freightliner and Western Star trucks.

Daimler “continues to see growth with its Detroit engines . . . and the growth is expected to continue in 2015,” said Brad Williamson, manager of powertrain marketing.

Freightliner used Cummins for 25.7% of its engines last year, down from 29% in 2013 and 30.2% in 2012, “a trend that bears watching as OEMs aggressively pursue vertical integration,” J.P. Morgan & Co. analyst Ann Duignan wrote in a Feb. 2 investors note.

Paccar’s market share rose to 10.2% from 7.9%, as it put about 30,000 engines into its Kenworth and Peterbilt trucks, a 58% increase over 2013.

Paccar declined comment, but Vice President Craig Brewster said in the company’s recent fourth-quarter earnings report that the MX-13 was installed in 37% its big rigs in the quarter.

Volvo Group’s share rose to 18.6% from 17.5%, led by Volvo Trucks’ market share, which rose to 10.5% from 9.3% as it added almost 31,000 engines to its trucks — a 37% jump from 2013 and well above its 28.5% truck-sales gain.

“Volvo’s 13-liter D13 is the engine most often spec’d in our North American trucks,” said John Moore, powertrain product marketing manager for North America. “We believe that the popularity of both the D13 and the 11-liter D11 will grow further as truck owners focus on fuel efficiency and weight savings.”

Mack Trucks, also part of Volvo Group, saw its market share dip to 8.1% from 8.2% despite adding almost 24,000 engines to its trucks, up 19.3%.

“Mack remains fully committed to an integrated proprietary powertrain strategy because of the superior fuel efficiency,” said Roy Horton, director of product marketing.

Navistar, which made the transition from exhaust gas recirculation to selective catalytic reduction technology in 2012, has been working to gain greater acceptance of those engines. Its engine share fell to 5.3% from 8.3%

About 63% of engines that went into Navistar’s trucks were Cummins, while the rest were the MaxxForce, Ward’s data showed — a turnaround from 55% MaxxForce versus 45% Cummins in 2013.

The company “continues to face an uphill battle to restore trust and credibility in the marketplace,” De Maria said. “I think Cummins will help them do that, but it may take some time.”

Asked at Navistar’s Feb. 4 investors day in Lisle, Illinois, whether he wants to sell more trucks with MaxxForce rather than Cummins engines, Bill Kozek, president of North American truck and parts, said, “I prefer to sell a truck with an International diamond on the front. I want to sell more of both.”

“Not all of our engines [were] SCR in 2014, as we were still completing our SCR transition for our medium-duty and severe-service trucks,” Navistar spokesman Steve Schrier said.

“Our goal is still to get to 50-50” between Cummins’ larger 15-liter engine and its own 13-liter engine, Schrier said, adding that “the lion’s share of 13-liter engines we sold in 2014 were our own.”

Staff Reporter Seth Clevenger contributed to this story.