Cummins Diesel Engine Business Buoyed by China; Plans to Expand Joint Venture

22 May 2005

Cummins, helped by demand in China and the success of its Dongfeng Cummins joint venture, reported its best financial year ever in 2004 with earnings of some $350 million on sales of $8 billion.

Cummins has steadily diversified its business and production base. In the fourth quarter of 2004, and for the first time in the company’s history, more engines (51%) were manufactured overseas than in the US. China leads non-US production, followed by India.

Cummins plans to invest some $74 million in the Dongfeng Cummins joint venture over the next three years to increase production to meet the surging demand for diesels.

Production at the joint venture has increased twenty times from 6,100 engines in 2003 to 125,000 in 2004. Sales have soared almost 9 times from $63 million in 2001 to $554 million in 2004—that’s a compound annual growth rate of 106% per year.

To maintain its 22% market share in the rapidly growing market for medium- and heavy-duty diesels in China, projected to reach 600,000 units over the next few years, Dongfeng Cummins will need to be able to manufacture up to 200,000 medium- and heavy-duty truck diesels.

Cummins recently demonstrated a diesel ISX heavy-duty truck engine with an increased Brake Thermal Efficiency (BTE) of 45% while reducing emissions to levels associated with the future 2007 EPA requirements. (Earlier post.)

Resources:

• 2005 Cummins Annual Meeting Presentation

• 2005 Annual Meeting Audio Replay