Truck Makers Chip Away at Cummins’ Engine Lead

This story appears in the Aug. 11 print edition of Transport Topics.

Cummins Inc. maintained leading market share among engine makers in North America during the first half of 2014, but continued to lose ground to truck manufacturers’ proprietary engines, WardsAuto.com said.

The report, which found total industry shipments climbed 16.6% to 138,866 from the same period a year earlier, sparked debate about how fast fleets are moving to smaller engine sizes.

Cummins supplied 39% of the diesel engines installed at North American factories, down from 41.1% in the same timeframe last year, Ward’s reported.

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Daimler Trucks North America increased its share to 26.8% from 25.7%; and Paccar Inc.’s first-half engine share rose to 9.3% from 7.3%.

But Volvo Trucks posted the largest market share increase, capturing 10.9% of the market compared with 8.4% a year earlier.

Meanwhile, Mack Trucks and Navistar International Corp. each saw its market share slip.

Several manufacturers attributed gains to improved fuel economy and integrated powertrain offerings as well as a shift in customers’ preferences.

“The North American truck market is in a steady transition from 15-liter to 13-liter engines,” said Ken Hastings, Paccar’s director of investor relations. “This transition is driven by the reduced weight and better fuel economy of the smaller engines.”

Paccar builds a 13-liter engine but does not offer its own 15-liter product. The company placed 12,948 of its own engines in its Kenworth and Peterbilt trucks, a 49.1% jump from a year ago.

“We believe 11- and 13-liter engine use will continue to grow as motor carriers place a premium on fuel and weight savings,” said John Moore, powertrain product marketing manager at Volvo Trucks.

He said the Volvo D13 model is the company’s most commonly spec’d engine in North America. The company also makes 11- and 16-liter engines.

Volvo’s first-half engine shipments jumped 51.9% to 15,144 units.

However, views on the prevalence of a shift to 13-liter engines differed.

“The market is changing a little bit, but the engine of choice, by and large, still seems to be the Cummins 15-liter engine,” said Lawrence De Maria, an analyst at William Blair & Co.

But analyst Stephen Volkmann of Jefferies & Co. said the 13-liter option has become more attractive because today’s smaller engines can provide greater horsepower and torque than in the past.

Volkmann also said truck makers are offering incentives, such as an extra year of warranty, to “sweeten the pot” for their own engine offerings.

Nevertheless, it’s the 15-liter Cummins ISX15 that remains the most widespread product, he said.

“The market is telling you that it still values the Cummins engine pretty significantly,” Volkmann said.

“Some data sources may suggest a trend toward smaller displacement engines, but not at a rapid pace,” said Amy Boerger, executive director for Cummins’ North American engine business. “We strongly believe that customers will continue to spec 15-liter engines for both fuel efficiency gains as well as the high resale value.”

DTNA’s customers are “still strong supporters” of 15-liter engines, said Brad Williamson, the company’s manager of powertrain marketing, but added that the truck maker focuses on providing the right engine for the application, whether it be a 13-, 15- or 16-liter product.

Daimler installed 35,235 engines from its Detroit subsidiary in Freightliner and Western Star trucks built in the first half of 2014, a 25.7% increase from a year earlier. Installations of Daimler’s Mercedes-Benz truck engines fell 21.3% to 2,034.

Williamson said the combination of the DD15 engine and DT12 transmission is setting the stage for further integration of the Detroit powertrain, which “very well could increase our penetration levels even further.”

Roy Horton, director of product marketing at Mack Trucks, said changes in volumes for the different engine sizes are related to more OEMs offering proprietary engines rather than a preference for smaller displacement.

Mack’s share of the engine market contracted to 8.3%, from 9.2%, but its engine shipments rose 4.5% to 11,480.

First-half market share for Navistar’s MaxxForce engines dropped to 5.7% compared with 8.3% a year ago. The company put 7,870 of its own engines in its International trucks, down from 9,837 in the first half of 2013.

Cummins engines went into 63.1% of the International trucks shipped in the first half of the year, up from 44.2% a year ago.

Navistar dropped its 15-liter MaxxForce engine and added selective catalytic reduction to its 13-liter product as it transitioned to its new emissions strategy. The company began shipping its 13-liter MaxxForce with SCR in April 2013.

Bill Kozek, president of Navistar’s North American truck and parts business, said the company anticipates that its Class 8 engine mix going forward will be evenly split between Cummins and MaxxForce.

Volkmann of Jefferies said Cummins’ strong engine sales to Navistar is “obviously a reaction to the troubles [Navistar] had with its own MaxxForce engines with [exhaust gas recirculation],” but added that the company’s new engines with SCR technology theoretically will solve those problems.

“That all has to be proven out in the market, and I think it’ll take a little while to do that,” he said.