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October 10, 2018 10:45 AM, EDT

Cummins, Isuzu Explore Powertrain Cooperation

Cummins Cummins engines. (Cummins Inc.)

Cummins Inc. and Isuzu Motors announced they have signed a letter of intent to jointly evaluate opportunities to deliver globally competitive powertrain products.

The two companies, each nearly 100 years old, maintain that significant investment will be required to deliver the best next generation diesel and natural gas engines as well as alternative powertrains, connectivity and autonomy that their respective customers demand.

Collaboration and strategic partnerships will be essential to share increased investment costs and win in the market, according to Columbus, Ind.-based Cummins.

“Isuzu is a leading global company with a reputation for excellence in trucks, powertrains and customer service,” Tom Linebarger, Cummins chairman and CEO, said in a release. “Our companies share a commitment to technology leadership, quality and dependability for our customers, and global reach. We also share common values in the way we do business and how we treat our people, our customers and our partners."

Isuzu’s perspective was similar.

“Both companies believe in utilizing technical strengths and know-how in the global market and collaboration to enhance competitiveness and to improve the engineering efficiency of future powertrains, which could help each company grow their business,” Tokyo-based Isuzu’s announcement said.

Isuzu is active in the Class 3 through Class 6 market in the United States.

Cummins

Isuzu NPR HD work trucks. (John Sommers II for Transport Topics)

It dominates the Class 4 market, based on U.S. retail sales — selling 7,911 trucks out of a total 11,910 through the first eight months of this year, according to WardsAuto.com.

In its fiscal 2019 first quarter, Isuzu saw total vehicle unit sales in Japan and overseas increase by 5,274 units, or 4.6% over the same period last fiscal year to 118,932 units.

During the first quarter, Isuzu reported gains in both net income and revenue. The company reports in yen.

Net income for the period ended June 30 amounted to $340 million, up 16% compared with the same period last fiscal year.

Year-over-year, revenue grew by $210 million, or 5.2%, to $4.3 billion.

Meanwhile, Cummins posted record revenue and earnings per share in the second quarter as demand for trucks and construction, mining and power generation equipment all improved.

Net income for the period ended June 30 rose 28% to $545 million, or $3.32 per diluted share. That compared with $424 million, or $2.53, in the year-earlier period.

Revenue hit $6.1 billion, up 21% compared with $5 billion in the 2017 quarter.

During the company’s most recent earnings call Linebarger said, “In discussing our plans to grow in attractive markets last November, we covered an approach to growth in the light commercial vehicle market which we said would be likely through consolidation or a partnership.”

Cummins’ most recent new relationship with another company began in September when it signed a memorandum of understanding with Kamaz, a Russian manufacturer of trucks and engines, for the development of electrified power.

Kamaz is actively developing a new electrified portfolio of battery-powered trucks and buses, and Cummins continues to expand its powertrain portfolio by developing electric power systems, fully electric and hybrid, for commercial applications.