The price jockeying begins

Aug. 6, 2009
“Meeting stricter EPA emissions levels in 2010, unfortunately, comes with a higher price.” –Jack Allen, president, Navistar North American Truck Group. Now is when things start to get interesting. Daimler Trucks North America (DTNA) today took the ...

Meeting stricter EPA emissions levels in 2010, unfortunately, comes with a higher price.” –Jack Allen, president, Navistar North American Truck Group.

Now is when things start to get interesting.

Daimler Trucks North America (DTNA) today took the wraps off the surcharge it’ll be adding to the base cost of its trucks for meeting the Environmental Protection Agency’s 2010 emission standards – for trucks equipped with engines using selective catalytic reduction (SCR) technology built by its subsidiary Detroit Diesel Corp. as well as for those using Cummins mid-range SCR-equipped engines.

Those increases amount to (drum roll please):

• A surcharge $9,000 for trucks equipped with Detroit Diesel DD15 and DD16 big bore engines, as well as the medium bore DD13;

• An extra $7,300 added to vehicles equipped with the Cummins ISC8.3 engine;

• And a $6,700 surcharge attached to the price of vehicles equipped with Cummins ISB6.7 engines.

This follows previous announcements from Navistar and Volvo Trucks North America (VTNA) about their sticker price increases to cover the cost of 2010 emission compliance. VTNA is charging $9,600 extra for its SCR-equipped trucks, while Navistar’s non-SCR emission reducing package, called advanced exhaust gas recirculation (EGR), comes with variable pricing much akin to DTNA’s format:

• An extra $8,000 for Navistar heavy-duty trucks equipped with the OEMs MaxxForce 11- and 13-liter engines;

• A surcharge of $6,000 for medium-duty models featuring Navistar’s MaxxForce 7-, 7.6-, 9- and 10-liter engines;

• And a similar $6,000 upcharge for all of Navistar’s IC Bus school bus models – the BE Series, CE Series, FE Series and RE Series – as well as IC commercial models (including the HC Series and LC Series) that are equipped with MaxxForce engines.

Of course, that’s not the entire pricing story as ALL of these products from every OEMs are subject to federal excise and sales taxes, raising the cost for meeting 2010 requirements another $2,000 per truck or more – for technology, if you recall, mandated by law by the very same federal government.

(A nice one-two punch, don’t you think? Mandate emission control upgrades and then collect higher taxes. And some in government wonder why truck owners and OEMs alike grit their teeth over emission regulations.)

Paccar’s two truck OEM subsidiaries – Peterbilt and Kenworth – still remain mum on the surcharges that’ll be applied to their trucks. Mack Trucks also hasn’t offered a firm price increase number yet, but in comments back in March at the Mid American Trucking Show, the OEM noted its increase would be in the range offered by its brother company Volvo.

“We have more models than Volvo, in such markets as vocational and refuse, so we are still working out the cost,” explained Kevin Flaherty, Mack’s senior vice president of sales. “But we will be in the ballpark of Volvo’s number.”

These, of course, are the official “sticker price” numbers – how discounts get applied in terms of volume orders, etc., is something yet to be worked out. There’s also the worry – one that’s become all too concrete in recent days – that these cost increases due to 2010 emission control technology are going to tamp down demand for new trucks even further, as sales orders and sales plummeted this year due to the economic troubles we are currently wading through.

According to FTR Associates, preliminary data shows that Class 8 total net orders for all major North American OEM's totaled 9,002 units in July this year – an increase of 9.6% over June, coming on the heels of June's 9.7% increase over May, yet still down significantly from last year.

FTR noted that July’s 9,002 orders represent a 37.3% year-over-year decline from 2008, representing an annualized order rate of 108,024 orders that encompasses the U.S., Canada, Mexico and exports.

"In early July we expected to see modest improvement in the monthly orders and that has come to pass,” said Eric Starks, FTR’s president. “However, while the orders are increasing month over month, the annualized rate continues to represent a very weak market for new vehicles. We expect this trend to continue well into 2010.”

Needless to say, these necessary but big price increases are going to make selling trucks that much more difficult as 2010 draws ever closer.

About the Author

Sean Kilcarr 1 | Senior Editor

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Leveraging telematics to get the most from insurance

Fleet owners are quickly adopting telematics as part of their risk mitigation strategy. Here’s why.

Reliable EV Charging Solution for Last-Mile Delivery Fleets

Selecting the right EV charging infrastructure and the right partner to best solve your needs are critical. Learn which solution PepsiCo is choosing to power their fleet and help...

Overcoming Common Roadblocks Associated with Fleet Electrification at Scale

Fleets in the United States, are increasingly transitioning from internal combustion engine vehicles to electric vehicles. While this shift presents challenges, there are strategies...

Report: The 2024 State of Heavy-Duty Repair

From capitalizing on the latest revenue trends to implementing strategic financial planning—this report serves as a roadmap for navigating the challenges and opportunities of ...