Eaton's medium-duty Procision AMT, introduced in 2014, is going to be a key offering within the new Eaton Cummins Automated Transmission Technologies joint venture. (Photo by Sean Kilcarr for Fleet Owner)

Building a global automated transmission strategy

April 11, 2017
New 50/50 joint venture between Cummins and Eaton aims to eventually build global presence in automated transmission market.

The formation of Eaton Cummins Automated Transmission Technologies announced by Eaton Corp. and truck engine partner Cummins Inc. this – a new 50/50 joint venture to build automated mechanical transmissions (AMTs) for heavy- and medium-duty commercial vehicles – is part of an effort by the two companies to begin building market share with a style of powertrain that’s in high demand.

Last year, for example, Volvo Trucks North America noted that the I-Shift AMT – originally for the European market in 2001 – got spec’d on 83% of its truck models sold in North America back in 2015, with higher percentages expected going forward.

Add to that a report issued by the North American Council for Freight Efficiency (NACFE) several years ago that highlighted the fuel-savings potential of AMTs, along with the driver-friendly aspects of automated gearboxes, and the stage is more than set for a big changeover in powertrain selection within the global commercial vehicle market.

Ken Davis, president of Eaton’s vehicle group, said that the initial focus of the Eaton/Cummins AMT joint venture will be on commercial vehicles in linehaul highway operating environments, especially where the company’s new heavy-duty AMT scheduled to be unveiled later this year is concerned.

“Our next generation product is especially going to start in linehaul highway operation first, then we’ll build up to 18-speed options for other [heavy truck] segments,” he said in a conference call with reporters this week.

By contrast, the focus for Eaton’s medium-duty dual-clutch AMT within the joint venture – the Procision – will be on segments such as pickup and delivery trucks and shuttle bus service, with perhaps expansion into the recreational vehicle market, Davis added.

Ed Pence, vice president and general manager of the high horsepower engine business at Cummins, added on the call that the discussions about forming this joint venture started back in September 2015 as part of a strategic focal point expressed by Tom Linebarger, chairman and CEO of Cummins.

Pence said Linebarger identified powertrains as a “growth market” that Cummins needed to put more focus upon – and the engine maker by that point already had a partnership established with Eaton, Pence noted, which made for a good fit.

“We’ve been talking about this since the introduction of Smart Advantage back in 2013,” he explained. “This [joint venture] is the next level opportunity.”

Eaton’s Davis added that, as a transmission-focused business, the joint venture will also seek to provide solution for “vertically-integrated” OEM engines as well.

“We understand that in order to compete in this market, we need to integrate with OEM engines,” he stressed. “It’s very clear we’ll be integrating these transmissions with Cummins engines and OEM engines.”

The Smart Advantage Powertrain package.

Cummins’ Pence emphasized that dealing with “vertical integration” is not new in the trucking industry.

“We’ve been dealing with it even since the late 1970s; there’s a considerable amount of vertical-integration within the landscape of our major markets,” he emphasized. “Our strategy very much aligned with Eaton’s – build the best products with a high degree of optimization for OEMs with high performance backed up by high support. It’s a very complimentary strategy for this partnership moving forward.”

In a separate call with industry analysts, Craig Arnold, Eaton’s chairman and CEO, stressed that he thinks this particular JV will deliver even more attractive returns while provided added and needed scale to Eaton.

“We think business well positioned to growth in and around changes in a regulatory environment around fuel economy and emissions,” he explained. “We think it strengthens case for best address future demands for drivetrain performance.”

“This is an opportunity to look at our business and ask how best we can position it to grow,” added Eaton’s Davis. “This partnership with Cummins makes sense every level and leveraging Cummins’ global presence. The main focus right now is how to accelerate growth in U.S. and then globally. Certainly as we get into this venture certainly take a look at what opportunities exist in terms synergies material and development.”

“It’s about accelerating our ability to develop and deliver sophisticated products for our customers,” added Cummins’ Pence. “We’re combining and aligning the engineering expertise of Eaton and Cummins for [truck] OEMs and their end customers as well as leveraging and combining the strength of both company’s service networks. We see the 50/50 opportunity to design and sell future AMT systems and develop further value for both our companies in the future.”

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