WESTIN, FL – A lack of incentives combined with price increases and a reduction in operating benefits ultimately doomed manufacturers’ efforts to prevent a major product pre-buy and subsequent fall-off in truck sales due to the introduction of 2007 low emission engines.
Class 8 sales fell nearly 47% in 2007, dropping to 150,965 units from 284,008 in 2006 – a decline of 133,043 units, according to data compiled by Ward’s AutoInfoBank. Sales in the medium-duty Class 6 & 7 market fared only slightly better, contracting by 36,608 units, or 22%, to 220,128 units in 2007.
Yet while engine makers believe a similar pre-buy may again occur ahead of the rollout of 2010-compliant products, they also think there are more positive elements involved this time around – giving them a better opportunity to reduce the severe sales swing that occurred in 2006 and 2007.
“Our efforts as an industry to prevent a major pre-buy before 2007 did not go so well, even after a very significant effort to educate our customers about what was going on,” said Tim Tindall, director of component sales for Detroit Diesel Corp. (DDC) here at a special engine roundtable during PHH Trucks’ ninth annual fleet management conference.
“Making a major emission change to engines without disrupting production volumes is very difficult,” Tindall said. “In Europe, tax incentives encouraged fleets to buy low- emission products. In the U.S., there were too many disincentives; the pre-buy was driven because the engines were more expensive and they added cost to [fleet] operations.”
But for 2010, different elements will be in play. First, while there will be an up-charge for 2010-compliant engines, it won’t be as high as what fleets experienced in 2007. Second, all the engines for 2010 will remain the same as 2007 – there won’t be any technological changes. Finally, there’s a chance in 2010 to create positive operating metrics, which includes improving fuel economy, said Tindall.
“By using SCR [selective catalytic reduction] to meet 2010 emission rules, we’ll be able to give customers something back – namely improved fuel consumption,” he explained. “It’s the first time in a long time over this emission change cycle that we’ll be able to offer a form of payback.”
“The upcharge for our 2010 engines will be minimal, because there’s going to be no additional ‘bolt-on’ technology like what we saw in 2007, and fuel economy should stay the same,” added Steve Perkins, big bore engine senior sales specialist for International Truck & Engine Corp. He noted that International’s MaxxForce 11 and 13 liter engines won’t use SCR to meet the 2010 rules.
Perkins noted that the current experience with 2007 engines should also help reduce the pre-buy fervor in 2009. “I personally believe there will be some pre-buy, but not as much. Fleets I think saw that many of their fears about 2007 engines turned out to be much ado about nothing, so that will influence their decisions about 2010,” he said.
Ralph Hammer, technical support manager for Cummins Inc., noted fuel economy won’t decline from current levels for Cummins’ 2010 heavy-duty products – a new generation of engines currently designed “Heavy Duty X” that include an 11.9, 15, and 16 liter models. Those heavy-duty engines won’t use SCR, though the company will be using SCR in its smaller block products. There also won’t be a need for a new engine oil spec, either, so fleets can use either of the current CI-4 or CJ-4 blends.
DDC’s Tindall said while he also believes there will be some pre-buy, the positives that will be in play for 2010 could help minimize it. He added that DDC will also have a complete line of new engines as well – the 13 liter DD13, 15 liter DD15, and 16 liter DD16 – for 2010, completely replacing the Series 60 and MBE 4000 models.“Our approach to 2010 is to show that savings are going to be there,” he stressed. “There’s going to be lower maintenance cost, minimal additional weight, and significantly better fuel economy.”