Cummins Adds to Market Share in 2008 as Caterpillar’s Engine Sales Decline

By Frederick Kiel, Staff Reporter

This story appears in the Aug. 25 print edition of Transport Topics. Click here to subscribe today.

Independent engine manufacturer Cummins Inc. continued increasing its market share in heavy-duty engines during the first half of 2008, while sales by competitor Caterpillar Inc. dwindled, WardsAuto.com reported.

Cummins sold 40,329 Class 8 engines in the year’s first six months, accounting for a little more than 40% of the market, up from 32% in roughly the same period last year. Meanwhile, Caterpillar Inc., which last year lost its eight-year hold as the top independent truck-engine supplier, sold 11,906 units for a 12% market share, down from about 20%.

In 2006, Caterpillar held a leading 28.3% of the Class 8 market, versus 25% for Cummins (10-8, p. 5).

In June, Caterpillar said it would stop selling heavy-duty truck engines in the United States after 2009 (6-16, p. 1).

“Many of the truckers were already moving away from Cat prior to the announcement [of its withdrawal],” Eric Starks, president of transport forecasting firm FTR Associates, Nashville, Ind., told Transport Topics. “This change happened in fairly short order during 2007 and derived from the problems Caterpillar had getting their engine up to standards.”

All heavy-duty engine makers introduced new technology in 2007 to meet tightened federal emission standards.

Fleets complained of various computer and mechanical problems with all of the first new engines, but criticisms about Caterpillar’s power plants continued throughout 2007 (11-12, p. 5).

Chris Brady, president of Commercial Motor Vehicle Consulting, Long Island, N.Y., said that because Caterpillar did not disclose its intention to halt production of heavy duty engines until mid-June, data for the first half of 2008 don’t show whether Caterpillar will suffer a further deep drop-off in sales.

Caterpillar executives promised that they will continue technical and parts support for all of its engines throughout their service life.

“My gut tells me that when you say you’re leaving the business, it won’t help sales, and we’ll probably see that down the road,” Brady told TT.

Starks agreed, but said he believes the erosion will not start until 2009.

“Completed engines are already in the pipeline to be put into new vehicles and any orders currently in the backlog would still need to be built out,” Starks said. “My sense is that the biggest hit to the number of Cat engines will not occur until 2009. A likely scenario is that the industry will see the Cat market share numbers deteriorate slowly as we move through 2009.”

A total of 98,678 Class 8 engines were sold in the first six months of 2008, along with 21,273 Class 7s, Ward’s reported Aug. 11.

In addition to the Cummins and Caterpillar products, proprietary engines from integrated truck manufacturers made up the rest of the market.

Daimler AG’s two engine brands — Detroit Diesel and Mercedes-Benz — sold a total of 24,017 units in the first six months for a 24.3% share; Volvo AB’s Mack and Volvo subsidiaries sold 13,772, or 13.9%, while Navistar Inc. sold 8,654, 8.8% of the market.

The heavy-engine market will see more changes in 2009. Daimler will stop importing Mercedes-Benz units, producing all its North American engines under the Detroit Diesel brand at its Michigan factory; Paccar Inc. plans to make its own branded engines for Kenworth and Peterbilt trucks, and Navistar plans to produce 11- and 13-liter models of its MaxxForce engines.

By truck manufacturer, Daimler-owned Freightliner Trucks bought most of its heavy-duty engines so far this year from Daimler subsidiaries — 53.3% from Detroit Diesel and 25.8% from Mercedes, but also 14.2% from Cummins and 6.7% from Caterpillar, Ward’s reported.

For International Trucks, 54.7% of engines were Cummins, 40.3% Navistar and 5% Caterpillar, Ward’s said.

For Kenworth, 72.3% of buyers chose Cummins and 27.7% of buyers picked Caterpillar.

For Peterbilt, 69.8% were Cummins engines and 30.2%, Caterpillar.

Mack Trucks come only with Mack engines, while for Volvo, 56.6% of buyers selected Volvo engines and 43.4% picked Cummins.

For the two other Daimler subsidiaries, 39.2% of Sterling Trucks buyers selected Mercedes; 31% Cummins; 15.8% Detroit Diesel and 14% Caterpillar; while 39% of Western Star engines were Detroit Diesels; 36.4% were Caterpillars; 23% used Mercedes; and 1.6% had Cummins engines.