July 02, 2008 Vol. 4, No. 14

Not a lot of earth-shattering news to report this time, not like my last newsletter. Two weeks ago the subject was a meaty one, namely Caterpillar’s departure from the on-highway engine business and the somewhat foggy announcement of its intention to develop an on/off-road vocational truck with its Illinois compatriots at Navistar. I say ‘foggy’ because the telephone press conference that brought this news to motor noters like me was just a touch shy on detail. Like really shy.

One of the more murky aspects of this deal, which is really more a firm intention at this point, I believe, had to do with the statement that the two companies would work together “to develop, manufacture and distribute commercial trucks in select regions” outside of North America. The product offering would include “a full line of medium- and heavy-duty trucks, both conventionals and cabovers.”

I got to wondering about the cabover side of that plan – how, and for that matter why, would they find the resources to develop new ones? It seemed very, very unlikely. Sure, in many places beyond these shores the cabover is still king, but there’s any number of awfully good European and Japanese COE trucks already out there, with distribution and service organizations in place. Well, someone much smarter than I am reminded me that Navistar still builds the old International 9670 cabover in Brazil, suggesting that this must be the foundation that Cat and Navistar have in mind. I wonder. A decent truck in its time, but it’s one or two generations behind the current crop of cabovers. Just thinking out loud here, but I suppose that might not be a serious hindrance in some markets where technical sophistication would be overkill anyway. We’ll have to wait and see if anything actually comes of this.

The only other possible answer, and this seems a bit unlikely, is some sort of arrangement with Germany’s MAN, the source of the coming International MaxxForce 13-liter engine. With a relationship already established, I suppose the very competent MAN TGX or more likely the TGS cabover might be persuaded to dress in Illinois colors in some lesser markets where it isn’t already in evidence. Stranger things have happened in this sometimes frenzied global marketplace where any alliance seems possible.

And a medium-duty cabover? Well, the only obvious answer there is the Ford LCF re-badged and presently sold as the International CityStar. It started life as a Mazda, if I’m not mistaken, yet more evidence that name badges are more plentiful than the technology behind them these days. The difficulty there is that Navistar and Ford aren’t getting along all that well presently.

One winner in all of this, of course, is Cummins. Already riding a wave of success both globally and at home, the Indiana engine-maker is now the only independent choice in North America. And the investment community loves it.

In its 14th Quarterly Truck Survey, for example, UBS Securities LLC calls Cummins a solid “Buy”. The survey noted that “nearly 80%” of survey respondents said they’d rather have an EGR engine than an SCR motor in the post-2010 era, and two thirds of them said they’d prefer the Cummins.

I suspect Detroit Diesel, especially, will have something to say about this as we near 2010. It’s the most vocal of the SCR crowd, and will be singing the praises of its 2010 emissions technology very loudly indeed.

Predictably perhaps, the UBS survey found that Cat’s recent announcement will hurt its sales running up to 2010. The investment outfit says that over 20% of truck buyers who would have bought a Cat in 2008 or 2009 have changed their minds, knowing that the company is leaving the business. In fact, Cat is quite firm that it will support its on-highway engines pretty much ad infinitum.