A REPORT FROM MID-AMERICA

March 28, 2007 Vol. 3, No. 7

Last time out I covered the Work Truck Show in this newsletter and said that hybrid diesel/electric trucks had dominated the affair. Well, I spent last week at the Mid-America Truck Show and found hybrids turfed from top spot. This time, it was ’07 engines and auxiliary power systems that seemed to be the talk of the show. There were – count ’em – 28 different APU products on display at the Kentucky extravaganza, this continent’s biggest truck show.

Of course, the other dominant topic of discussion was the extent of this year’s downturn in truck sales after a record-setting 2006. The consensus? Class-8 sales in the
220,000-230,000 range for North America, not including Mexico. That represents a whopping drop from last year and it has some folks crying the blues. But it’s still going to be the 7th or 8th best year on record. The trouble is, those sales will come in the second half of the year, and most observers think things will pick up later than was once thought – meaning well into the third quarter.

In a long chat with Freightliner LLC president and CEO Chris Patterson at Mid-America, I learned that 70% of his company’s existing orders are for the second half of the year.

Despite that, the mood in Louisville was pretty buoyant, perhaps in part because trailer makers aren’t seeing anything but a pretty normal year. Because medium-duty and export sales remain strong. And because everyone knows that 2008 and 2009 will see a return to hefty truck sales once buyers feel safe with the new engines and then start yet another artificial cycle in advance of the 2010 emissions rules. When will it ever stop?

ArvinMeritor Commercial Vehicles president Carsten Reinhardt said the industry will be “in a trough” for the next three or four months. He added that 2008 heavy-truck sales would be in the 250,000 range “with big upside potential” and that we’d see 300,000 or even 310,000 in 2009.

As far as ’07 engines are concerned, there still aren’t enough of them in the field, in owners’ hands and working, to get a good fix on how they’re performing. But Patterson told me that the Detroit Diesel test engines in the field – doing some 30 million miles – have proven reliable. And drivers like them, he added, because of the improved throttle response derived from the variable-geometry turbochargers they use.

LOOKING AHEAD TO 2010, both Freightliner and Volvo/Mack have committed to selective catalytic reduction (SCR) as the emission-control technology of choice, but nobody else
has. Cummins technical guru Dr. Steve Charlton told me their decision would be made before year’s end, and that they can go either way – SCR or a variation on EGR with a NOx adsorber — depending on what’s deemed best for the customer.

I asked him if there were hints to be had in the fact that the ‘little’ Cummins in current Dodge Ram pickups already meets 2010 EPA rules. That’s a remarkable feat, incidentally, given how difficult it’s been to meet ’07 demands – they just skipped ’07 altogether and went straight to the next hurdle. Anyhow, he explained that a NOx adsorber, the critical component if SCR isn’t to be used, isn’t necessarily scaleable upwards. Meaning, what works on a little 5.7-liter engine might not work on 13 or 16 liters. We’ll see, and I suppose what we might well see from Cummins and others is a mix of technologies – some models for some applications using SCR while others don’t.

There’s lots of action on the engine front, with Paccar saying it’s about to start building its own engine plant somewhere in the U.S. southeast, Freightliner set to launch an all new Detroit Diesel engine in August, and International bringing on its big-bore Maxxforce engines created from an MAN block with an International top end and fuel system. The coming Paccar plant will be building a new-to-North-America 12-litre diesel based on one designed by its Dutch truck-making subsidiary, DAF. The Paccar-branded PX-6 and PX-8 engines are in fact Cummins products which will, presumably, continue to be built by the Indiana outfit.

The new Detroit Diesel motor, to be introduced in August, will in fact be a world engine, said Chris Patterson, available first in North America and slated to be the company’s only heavy-duty offering in 2010. That means only one aftertreatment system will have to be conceived, engineered, and manufactured. It will be built in Detroit, Japan, and Germany, with parts sourced from literally all over the world. After its launch here, it will be sold alongside the Series 60 and MB 400 until 2010.

Interestingly, he told me the price tag to engineer an engine into a chassis these days is in the $150 million mark. And people wonder why we’re seeing more vertical integration?