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Daimler touts benefits of vertical integration

KASSEL, Germany -- With 50% of a commercial truck’s value equation belonging to the powertrain, Daimler has emphasized its intent to push for further vertical integration in the North American market.


A front axle is assembled at Daimler's Kassel, Germany axle plant.
A front axle is assembled at Daimler's Kassel, Germany axle plant.

KASSEL, Germany — With 50% of a commercial truck’s value equation belonging to the powertrain, Daimler has emphasized its intent to push for further vertical integration in the North American market.

North America is unique in that it is the only market in the world in which customers still spec’ components from various manufacturers. While that practice won’t be stopped anytime soon, Daimler officials speaking at a tour of the company’s Kassel, Germany axle plant said the company will be advocating for increased vertical integration, now that it offers its own engines, axles and automated manual transmission.

“For us, the powertrain is the driving force for a successful modular strategy and also for realizing economies of scale,” said Stefan Buchner, head of global powertrain, procurement and manufacturing engineering with Daimler. “We are deeply convinced this combination (of Detroit engine, transmission and axles) has enormous potential not only for our customers, but also for ourselves.”

Buchner said having ownership of both the engine and transmission is key, as it allows the company to access and interpret the software data generated by both systems and optimize them to work together as efficiently as possible.

“No OEM shares all their software data,” Buchner said. He claimed customers could achieve up to 7% better fuel economy by choosing a fully integrated powertrain.

How far will vertical integration go? Buchner cited market penetration goals of 85% Detroit engines in Freightliner and Western Star trucks, with 60% having Detroit front axles and 40% spec’d with the company’s rear axles.

With the company’s DT12 automated manual transmission coming on-stream this year – it will be available with the DD15 engine next May, the DD13 in November 2013 and the DD16 in early 2014 – Buchner said the company is aiming for a  penetration rate of 15%.

Buchner also said it will be easier to meet impending GHG14-17 emissions requirements via a fully integrated powertrain.

Daimler’s Kassel axle plant is the largest in the world, producing more than 500,000 axles and 212,00 propshafts each year. The plant was initially opened in 1810 as a foundry for building cannons and bells. Daimler-Benz took over the plant in 1969 and began building trucks there. The facility was dedicated to axles, propshafts and gear sets in 1980. Some of those components are shipped to North America for installation in Freightliner and Western Star vehicles. Eighty per cent of the plant’s 2,900 employees are skilled workers and Daimler offers interesting incentives, such as a kindergarten for employees’ children.


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1 Comment » for Daimler touts benefits of vertical integration
  1. John says:

    It would be good if vertical intergration would work but it always seems one part of it is a problem and suddenly the resale value drops. Just look at the price drop on a mercedes powered truck.

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