The much-balleyhoed EPA emissions deadline — Oct. 1, 2002 — is six months gone, and now fleets are living with the aftermath. The first consequence is that trucks cost more: $3,000 to $8,000 seems to be the spread. The higher prices are enough of a disincentive to buy new iron, but a lot of truckers still fret about elevated running costs of engines equipped with cooled exhaust gas recirculation (EGR) or other means to cut oxides of nitrogen (NOx) and other pollutants. Reports from test fleets show pre-production ’02 diesels to be reliable with little fall-off on fuel economy or performance. But with many buyers just now taking delivery of trucks with EGR engines, the fence-sitters are apt to wait and see how the early adopters fare.

To alleviate the pain of the additional pricing, the truck manufacturers have floated a raft of incentives to convince customers that now is the time to buy. Truck OEMs and engine manufacturers have cranked up their PR machines to reassure customers that the engines will be able to do the job they’re needed to do. Caterpillar, which was expected to unveil details about its ACERT emissions controls at the Mid-America Trucking Show in Louisville, Ky., last month, makes much of the fact that the base C15 engine is unchanged at present. Detroit Diesel points to its successful experience with EGR bus engines. And Cummins rolls out impressive mileage totals for its fleet of EGR-equipped development engines.

More than that, though, an array of new programs have been developed to give potential customers additional peace of mind. These range from service guarantees to truck rentals when repairs cannot be completed in an acceptable time.

And truck manufacturers have spent the last three months promoting the sort of sales incentives you’d find at a car lot. International’s “Catch It While You Can” promotion sums it up. Qualified buyers could avail themselves of zero per cent financing for the first year of a five-year contract, and up to 8.6 per cent on the outstanding 48 months. That translates to an effective APR of 4.99 or 5.49 per cent depending on the truck model; even though the program doesn’t have interest assessed in the first 12 months, the payments are constant throughout the 60 months with the first 12 all going toward the principal.

The offer expired March 31, but there are indications it could be revived in some form if sales don’t pick up.

International president Steve Keate says the company is confident that these incentives will get customers thinking about orders. “We have confidence within our company,” he says. “Nothing talks louder than vehicles performing. And they are performing as expected.”

Keate says he feels especially buoyant about the International programs coupled with the fact that roughly 70 per cent of International’s heavy-truck customers order Cummins engines. Last August, Cummins announced a replacement truck guarantee for any EGR-equipped ISX or ISM engine down more than 24 hours. According to Cummins communications manager Amy Davis, a few issues have cropped up with the early production of the ’02 engines, “but we haven’t rented a truck yet,” she says.

Many of the sales incentives among truck manufacturers have been short-lived, timed to generate order activity in the early months of the year. The Cummins uptime guarantee — a promise that’s exceptionally difficult to fulfill in Canada, where service outlets and broken trucks can be equally far-flung — expired at the end of March, but the company announced three new extended warranty options for its heavy-duty engines. All the new components are fully covered in Cummins’s base warranty.

These days, Detroit Diesel incentives programs are handled under the Freightliner umbrella and they are apparently working: Detroit Diesel started 2003 by adding a second shift. And while the company does not make its deals public, a recent 2,100-truck J.B. Hunt order made news because a big slice of the business included the Mercedes-Benz MBE4000 engine. By no means are all Detroit sales 4000 Series. Adding up the business that DDC has likely booked, orders for EGR Series 60s may run to five figures.

Freightliner Trucks currently has no co-ordinated sales incentive program in Canada –previous deals have expired but more are forthcoming, the company says. Notably, Freightliner’s program for the U.S. market is targeted at individuals and small fleets — typical retail buyers. To motivate them, Freightliner is dangling low-percentage financing or cash back on certain models and specs.

Freightliner’s other nameplates — Sterling and Western Star — are both under senior vice-president John Merrifield, who says his division has basically followed the same lines as his competition: aggressive deals on low financing, interest-free introductory periods and extended warranties in conjunction with Detroit Diesel. Customers who are looking at price hikes for Caterpillar engines see the several thousand dollar savings with the Mercedes-Benz engine, which doesn’t have to comply with the EPA standards until January 2004.

While Sterling-Western Star programs focused on first-quarter orders for delivery before the end of the second quarter, Merrifield grants that the cutoff is something of a moving target, designed to keep market interest up. “We have not cut the Sterling build rate one unit and we try to be optimistic about the market,” he says.

Elsewhere, Kenworth is extending a discount program with Allison Transmission. Scheduled to run through May 7, 2003, there are special discounts on the HD4060, HD4560, and HD4070 in trucks built by June 30. It applies to Kenworth T800 112- and 120-inch BBC, C500, and selected W900 models.

While the transmission is more appealing to vocational customers and is targeted at loggers, concrete, dump, snowplow, mining, refuse, and heavy-equipment hauling, the promotion is available on trucks with sleepers. The discount is limited to 10 units per customer. Kenworth spokesman Jeff Parietti adds that there will be ongoing promotions announced through the year.

At Peterbilt, general marketing manager Scott Pearson indicates there is a good chance sales incentives that wrapped up at the end of last year will be dusted off for a second go-around.

“We’re in the process of looking at trucks on dealer lots, some pre-’02 and some post-’02, looking at extending the same incentives,” he says. These included longer warranties on Cummins engines and Eaton components, and deals on weight-saving options like the Flex Air tandem suspension and aluminum wheels at no premium.

“These are very beneficial to the dealer,” Pearson explains. “It gives him a sales opportunity with the customer. But it’s good for the customer as well. Saving money offsets concerns, eliminates a sticking point. But the incentives together address weight, reliability, warranty, and expense.”

Peterbilt offers both Caterpillar and Cummins engines. Weaned off Detroit Diesel over the past two years, customers decided a Pete with a different engine was still a solid purchase –and Pearson notes that the relative penetration between Cat and Cummins hasn’t changed. “There have been no defections, and we have had no real issues with either engine.”

Retail purchasers of new Volvo VNs and VHDs equipped with EPA ’02 engines will receive a $2,500 cash incentive for trucks delivered during 2003. In addition, Volvo Trucks Canada is offering a three-year/300,000-mile extended engine warranty on new VNs and VHDs.

“Volvo wants to keep the tremendous momentum we built with the launch of the new VN going strong,” says Scott Kress, senior vice-president of sales at Volvo Trucks. Putting $2,500 in buyers’ hands will help them purchase the new trucks they need in a tight economy, he says, “while the extended engine protection shows our confidence in the new engine technology. So buyers are getting a great truck backed up by Volvo’s customer support, and a cash sweetener for the deal.”

The customer has a choice of how to receive the cash incentive: as a cheque to go in his pocket; as credit against the purchase price of the new truck; or to buy down the interest rate on a new truck loan, when the purchase is financed through Volvo Commercial Finance.
Volvo is offering extended engine protection for Volvo VE D12 and Cummins ISX engines at no charge as part of this promotion. This covers parts and labour for emissions control systems on the engines, plus other components like injectors and turbochargers, as well as towing.

Still, in the atmosphere of an uncertain economy, tighter border security, and spiking fuel costs, truck buyers have reason to be cautious. Volvo Group chief executive Lief Johannson says the company, which produces Volvo and Mack trucks, see sales as “flat to improving.” International’s Keate projects that it will take until the second half of the year before sales kick into gear. Both see better times ahead, though, as the engines build a track record that inspires confidence, and customers realize they simply need to have trucks to renew their fleet.

You can pretty much tell how much each manufacturer is charging for the emissions upgrades because most have chosen to show the impact of the latest mandate as a surcharge. Freightliner’s invoice, for instance, shows a separate charge for the engine to reflect its higher cost and an engineering charge for the upgrades to each truck’s chassis.

To accommodate the new technologies — most of which are generating more heat to the cooling system — there are new designs for either radiators, or whole systems including radiator, shroud, cooling fan, and fan drive. International has to address chassis issues — for instance, widening the front spring base to make wide-track axles common across all models and “taking weight out wherever we could touch the vehicle,” says Jordan Feiger, vice-president and general manager of International’s Heavy Truck Center.

The most extensively updated chassis of all is Volvo’s new VN, which combines underhood air management with improved exterior aerodynamics in an effort to cancel out the loss of fuel mileage that comes with EGR technology.

In the case of Volvo, there’s a whole new hood treatment to optimize airflow. There have been chassis/engine packaging issues: some components were moved to allow for extra engine plumbing associated with EGR or for whole new exhaust systems with the a catalytic converter in the case of Caterpillar engines.

Volvo also elected to use the Hendrickson Airtek front suspension and fabricated steering axle, which more than offsets the 100-plus-pound weight penalty of the new engines. With its own Volvo power or the Cummins ISX, the significantly updated and re-engineered VN shows a surcharge of $3,500 US for EPA-related costs.

Uniquely, Caterpillar requires engineering for its exhaust aftertreatment device that is part of the “bridge” engine technology. This interim introduction is to carry Caterpillar through to its anticipated rollout of the full ACERT (non-EGR) engines in the coming fall. Cat has been tight-lipped about ACERT, but it is likely that there will be both a catalytic converter and particulate trap to accommodate, along with big fuel system changes. In the interim bridge engine, there’s little different mechanically — a fact that seems to appeal to the market right now, for Caterpillar has been running flat out to meet demand for its C15 engine.

And here’s another interesting wrinkle. Some fleets are looking at an early wave of purchasing as they contemplate the future. There is yet another round of emissions requirements tabled for 2007, and they are much tougher than the 2002-2004 limits: both particulate matter and NOx are to shrink to a tenth of today’s levels as the rule phases in over the three-year period to 2010. Since the technologies to get there are still in the lab, there is again little time to get the next round of engines ready and tested. You may be only too glad to have the 2002 EGR units, or whatever ACERT turns out to be, in preference to the next level of emissions technology.

The time from early 2003 to late 2006 is a relatively short turn as fleets look to run trucks longer. But there may be a huge incentive to get the trucks bought now so they can be traded against the last of the current technology before the next regulations bite in January 2007.