And then there were four

Sept. 6, 2016

Now, it’s the big 4 with three of the four based in Europe. It’s Daimler, Volvo, VW, and PACCAR. By the time the USA reaches 2027 and the GreenHouse Gas Phase II regulations are fully in force, we will have a global, vertically-integrated truck.

PACCAR needs to find a transmission and axles yet to be able to compete, long-term with the others. Cummins and Eaton are left with challenging prospects for their operations. Both of their shares of the market have declined as the vehicle OEM’s have vertically integrated and introduced their own, proprietary parts.

There’s no doubt in my mind that 10 years from now, VW will own more than the 16.6% post transaction that they will own later this year. Andreas Renschler was in charge at Daimler Trucks for many years and, before that, he was involved at the board-management level. Daimler started by purchasing something like 15% of Detroit Diesel in the 90’s. It then increased its share until full ownership was realized in time to develop products for new emissions legislation. I expect Andreas to follow the same path as he combines the brands SCANIA, MAN, VW, and Navistar. It won’t be easy, but it will be accomplished. Troy Clark mentions “open integration” in the documents that accompanied the announcement. But, I see “vertical integration” written all over this.

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