LOUISVILLE, KY – Despite a major falloff in heavy- and medium-duty truck sales and a downturn in the U.S. economy, Cummins Inc. said it recorded one of the best years in its history in terms of revenues and profits. In addition, the engine maker believes it can achieve similar fiscal results over the next few years as it begins field-testing technology to help its products comply with 2010 emissions standards.
“We built 900,000 engines last year for multiple markets worldwide, generating $8.2 billion in revenue. That’s more than double our revenue from five years ago; in fact, it’s almost triple the revenue,” said Jim Kelly, president of Cummins’ global engine business, speaking at a special press event here ahead of the Mid-America Trucking Show.
“As a company, not only did we perform in 2007 as well as we did in 2004 – which at the time was a personal record for us – we had the second best year in our company’s history, despite a 50% decline in heavy-duty truck sales and a 43% drop in medium-duty truck sales,” Kelly noted. He attributed these results to Cummins’ ongoing global strategy of diversification into other engine markets, such as power generation and marine.
“As we shift our focus to 2008 and beyond, we expect to see further growth both in North America and especially from the rest of the world for our products, in spite of the tenuous U.S. economy,” Kelly added. “We expect the truck market to come back somewhere in the second half of this year.”
Jeff Jones, Cummins’ vp-sales & marketing, pointed to the company’s growth in truck-engine market share as a sign of customer confidence. According to Cummins, its heavy-duty engine market share in the U.S. grew from 23%-24% in 2006 to 38% by 2007, reaching 44% in January of this year. In the medium-duty segment, market share climbed from 15% in 2006 to 62% in January 2008.
Jones added that fleets are also reporting few issues with Cummins’ 2007 emissions-compliant products. “One of our largest fleet customers has 1,700 of our 2007-compliant ISX engines in service. They report equal or slightly better fuel economy, no issues with passive or active regeneration, no need to remove ash from the diesel particulate filters, and less than 50 warranty issues--none of which resulted in any significant truck downtime,” he said. “In fact, they are ordering 5,000 additional 2007-compliant ISX engines through the end of next year.”
Kelly said similar results are expected for Cummins’ 2010-compliant products, prototypes of which are entering field trials this May. “We believe we have the right technologies for the right engine markets,” he said, pointing out that while Cummins’ medium-duty engines will use selective catalytic reduction (SCR) systems to reduce oxides of nitrogen (NOx) to the required levels, heavy-duty models will not.
“It’s not about having a foot in each camp; we’re not hedging our bets here,” Kelly stressed. “We believe it’s a case where one size does not fit all. Medium-duty trucks return home every night, so re-supplying them with urea [for the SCR system] is relatively easy. For long-haul truckers, the urea supply infrastructure is an issue, so we will rely on advances with in-cylinder EGR [exhaust gas recirculation] to comply with the regulations.”
Steve Charlton, vp for heavy-duty engineering, noted that Cummins’ non-SCR engines would be compliant with the regulations without the need to use credits.
Ed Pence, vp and general manager for the heavy-duty engine group, commented on the possibility of another pre-buy: “Regardless of how we as an industry effectively mitigate technology aversion, there’s still going to be price aversion in this market. And while we won’t comment on 2010 truck pricing, obviously there’s a cost associated with cleaning up emissions,” he said. “But we won’t see a pre-buy like 2007.”
In addition, Cummins made the following product announcements:
- An exhaust re-routing kit for the ComfortGuard auxiliary power unit (APU), designed to be integrated with the company’s ISX engine to route APU exhaust emissions through the truck’s main DPF, has been approved by the California Air Resources Board (CARB) and will be in production by the end of June. A stand-alone DPF will also be available for Cummins’ APU, but hasn’t received CARB approval yet.
- Cooler-EGR ISX and ISM engine components have been added to the long list of remanufactured products handled by the ReCon division.