Truck Manufacturers Consolidate, Production Slows True to predictions, days grow shorter, leaves turn and fall, and this year truck sales slowed. It was an outcome predicted with varying degrees of certainty by several of the major truck manufacturers, and it has led to several rounds of production cutbacks and worker layoffs.
Slowing sales notwithstanding, the past 12 months have been an active period for new model introduction and industry consolidation with Freightliner and Navistar both making waves as purchasers or sellers. In one instance, a new model was introduced and discontinued all within the space of a year.
Consolidation moves began early in 2000 with the announcement that AB Volvo had acquired RVI, the commercial vehicle arm of Renault. The deal exchanged 15% of Volvo for 100% of RVI and nearly doubles Volvo's global truck business. In North America, this move changed the ownership, but not the operations, of Mack which is a subsidiary of RVI. Mack and Volvo will share purchasing and development efforts, but production and sales of Mack and Volvo trucks will remain separate. The deal does not include Renault's interest in Nissan Diesel of Japan.
Freightliner Buys Western Star The drive to consolidation picked up more momentum in July with the announcement that Freightliner would acquire Western Star. The deal closed in late September with Freightliner paying $453 million for the Canadian truck builder. The acquisition also resulted in the announcement that Western Star would not distribute a Class 7 truck announced earlier in the year. The Western Star 3700 series trucks were to be built in Mexico by Dina Camiones. After the acquisition, Freightliner announced that it would not be buying trucks from Dina.
DaimlerChrysler, parent company of Freightliner, also took part in the consolidation trend by purchasing the part of Detroit Diesel that it did not already own. That deal is not yet final but is expected to cost roughly $425 million. In addition, DaimlerChrysler will supply Mercedes-Benz engines for Freightliner and Sterling trucks.
Speculation has been intense about the fate of International Trucks following a move by a group of stockholders instructing Navistar International, the parent company, to investigate a sale as a way of increasing the stock price. Paccar Inc, parent of Kenworth and Peterbilt, has been mentioned as a buyer most often. Volkswagen, Volvo, and Fiat also have been discussed.
GM and Isuzu Combine Although not quite a consolidation, American Isuzu Motors Inc and General Motors merged their US medium-duty truck businesses. The new venture is known as General Motors Isuzu Commercial Truck LLC. The Chevrolet, GMC, and Isuzu brands remain intact, but advertising and sales promotion will be handled by the new company, which is owned 51% by Isuzu and 49% by GM.
The year 2000 opened with truck manufacturers still in an expansion mode. Mack reported record sales for 1999, up 12.8% from the previous year. Freightliner Corporation recently completed an addition to its assembly plant for Sterling trucks in Canada. Paccar opened new facilities in Canada as well with its new 425,000-sq-ft plant in Sainte-Therese, Quebec, that will produce both Kenworth and Peterbilt trucks. Volvo continued with an expansion of its plant in Dublin, Virginia, even as the company adjusted production schedules downward beginning in February 2000. Western Star opened a new 285,000-sq-ft plant in North Charleston, South Carolina.
Volvo and Mitsubishi formed an alliance in Canada, granting Mitsubishi Fuso franchises to Volvo dealers. The agreement adds Class 3 through Class 7 trucks to the product line for Volvo dealers in Canada.
Peterbilt Shows 387 Longnose Among heavy truck suppliers, Peterbilt introduced a 120-inch BBC longnose version of its new aerodynamic Model 387. In addition, to celebrate the first anniversary of the 387, Peterbilt is building a special group of 100 387s.
Sterling introduced a lightweight version of its ST9500 SilverStar. The longnose conventional tractor with a 77-inch high-roof sleeper weighs 16,980 lb. Sterling also has a lightweight day cab in the LT8500 that weighs 13,160 lb.
Following the introduction of the Century S/T and Columbia tractors late in 1999, Freightliner has introduced a day cab version of the Columbia. The 120-inch BBC tractor can use engines up to 600 hp.
Kenworth introduced its K300 low cab forward medium truck. Standard power for the new truck is a Cummins ISB engine with ratings from 185 to 240 horsepower. It is available with an Eaton six-speed synchronized manual transmission or an Allison MD-series automatic. Peterbilt also introduced its Model 270 of this Class 6 and Class 7 straight truck for distribution applications. Peterbilt also extended its Model 330 into Class 6. The medium duty conventional truck is powered by a Caterpillar 3126 engine rated at 210 hp and uses Dana Spicer axles rated at 8,000 lb for the front and 18,000 lb at the rear.
Mitsubishi Fuso introduced a new product lineup with more horsepower and new automatic transmissions. One new model, the Class 4 FE, is specifically for California. It uses a 145 hp engine certified to meet California emissions standards. The FE is available only with an automatic transmission.
Among component suppliers, two large manufacturers, Arvin Industries Inc and Meritor Automotive Inc, merged. The new company is known as ArvinMeritor. In a name change, Cummins Engine Company officially shortened its name to Cummins Inc.