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Caterpillar Exiting On-Road Engine Business; Entering Strategic Alliance with Navistar

12 June 2008

Caterpillar Inc. is entering a strategic alliance with Navistar International and will exit the on-road engine business. The two companies have signed a Memorandum of Understanding (MoU) to pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms. The two companies intend to focus on global truck opportunities, including North American severe service construction trucks, as well as technology development for engines worldwide.

Through this alliance, Caterpillar plans to target a 2010 introduction of a North American Cat branded heavy-duty truck. Concurrent with this new strategic direction, Caterpillar has determined independently that it will not supply EPA 2010 compliant engines to truck and other on-highway original equipment manufacturers (OEMs).

Caterpillar and its dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand.

In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines in the total contribution of our global engine profitability. Our global power systems business has grown significantly—in fact we supply approximately 400,000 diesel engines annually outside of the on-highway truck market. We intend to remain the world leader in clean diesel engines, and this collaboration is a key enabler.

—Douglas R. Oberhelman, Caterpillar Group President

The companies, which have commissioned teams to focus on the truck and engine opportunities, intend to work together to develop, manufacture and distribute commercial trucks in select regions outside of North America. The product offering would include a full line of medium and heavy-duty trucks in both conventional and cab over designs.

Under the alliance, Caterpillar and Navistar plan to cooperate on engine development, incorporating technologies from both companies. Caterpillar and Navistar intend to work together on development of mid-range engines for diesel applications, such as school buses and utility trucks. This engine development would support each company’s stated path not to utilize urea-based Selective Catalytic Reduction (SCR) technology.

There are many opportunities for technology sharing and development that would result in the ability to better meet the worldwide demand for diesel engines in both on and off-highway applications.

—Jack Allen, President, Navistar Engine Group

June 12, 2008 in Diesel, Engines, Vehicle Manufacturers | Permalink | Comments (15) | TrackBack (0)

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"This engine development would support each company’s stated path not to utilize urea-based Selective Catalytic Reduction (SCR) technology."

Good...


This is very bad news

This is a tell tail sign.

Business around the globe has been very good for Caterpillar because of the falling dollar value. They are stretched and are looking to concentrate on the high margin aspect of the business. Obviously, engine design and building is not one of them. Navistar will offload this low profit activity, in addition to support for joint developed engines. This support is always a no win situation for a manufacture.

M-m-m, no. Caterpillar did not exit heavy-duty truck engine business. Cat will just build the whole trucks by itself, in co-operation with Navistar. Decision to end supply of superb cat engines to competing truck brands is logical.

If Caterpillar builds the whole truck, what does Navistar do? Just engine design?

During the last down turn International Harvester had problems and sold it's no-longer-profitable farm implements division (and name) to Case Farm Equipment. It continued to operate IH trucks under "Navistar" and concentrated on making trucks.
The new deal gives them access to a great engine as well as a recognized brand name for their trucks.

you guys don't really understand. cat will stop producing the engines, and will instead buy them from navistar (as well as navistar chasis) and assemble the whole thing. it will then be branded as a CAT truck.
this is indeed very bad news! from what i see cat is basically balking at meeting tier4 requirements by 2010.

@ marc ~> think of it this way, Cat has noticed the thing is a dead horse and quit beating on it.

This press release is just CAT's why of delivering bad news and trying to make it sound good. CAT has lost signicant market share of the "On-highway" heavy-duty engine business, which has stricter emissions stands than off road engines. CAT does not have a solution for the tighter emissions requirements for 2010 can not compete in the on-highway market any longer. CAT's initiate to team up with Navistar to produce a CAT branded truck is an effort to replace the business it will loss in the on-highway market. The announcement that CAT will no-longer supply engines to other OEM is the real message in this press release.

Tight emissions regulation is forcing economies so as to be able to address the issues. Chrysler for example, is buying Cummins diesels and will expand its diesel purchases with Cummins. In effect making Cummins the diesel engine builder for its vehicles.

Caterpillar is doing the same thing but with Navistar, the renamed Internaional Harvester. Navistar will concentrate on building diesels and large trucks. CAT has decided to use the Joint Venture IH diesel engines in its product line, and will also use Navistar chasis and engines in its new Cat truck models.

In essence the new emissions standards is driving Cat out of the diesel engine business, and making IH a bigger player in that market.


I think some of you get it, but others don't.

Your 4 time pro-bowl left tackle just removed his helmet and walked off the feild. No matter how you try to spin it, the fact is, your team just got alot weaker.

Perhaps we can also export the trucking industry to China and Mexico along with all of the jobs. Not starving is perhaps more important than super clean truck exhaust.. Walmart does not even build its distribution centers next to railroad tracks that transport cargo at far less cost. Why not a pollution law that requires a certain percentage of a companies freight to be transported by train. Refrigerators have energy efficiency requirements but businesses and houses and cars do not actually have them if you can still buy Hummers and 20,000 square feet. ....HG...

as stated previously, some get it...some don't. CAT's exit from the truck engine business is purely based on the profitability of this segment of CAT's portfolio. Caterpillar has an obligation to its stockholders to make them money...simply put, the bottom line dollars generated from this segment is minuscule compared to the construction equipment, mining equipment, power generation and turbine buisness. The latest and future emission regulations that on-highway truck engines have to meet carry a HUGE R&D price tag, and CAT is savy enough to know when to bow out. CAT has not lost truck engine market share, but have increased market share in the markets that they persue. I was employed by Michigan CAT for 15 years and in the heavy haul segment CAT owns the business...Michigans 160,000# GVW combined with a hugely loyal customer base makes Cummins and Detroit stay on the porch. One fact that few people realize is every model CAT engine that is in a truck started out in a piece of construction equipment. IH and CAT have had a very close relationship for many years. The HEUI fuel system that is on every IH DT466E is CAT's design. I give them credit for bailing, but there are a whole bunch of truck owners and fleets that are pouting big-time!!!

Navistar and Caterpillar need to become aware of what is happening in Australia with some brilliant new technologies for trucks - this will solve many Emission and Anti-Idling problems in the USA.

It is a very lightweight Unit, which weighs just 16 Kilograms. This is an Emission Control Unit, which is also the world best anti-idle product by far. Suitable for driver cabins and sleeper cabins - an independent battery driven aircoditioner! Revolutionary technology. Fits a truck in 2 hours. Affordable. Launches in USA in 2009. For more information and contact details - Website: www.koolideas.com

This is the Truck Emissions and Anti-Idle SOLUTION we have all been waiting for. Revolutionary Australian battery-driven technology. Uses no fuel. For driver cabin and sleeper cabins. Weight is just 16 kilograms! For Information - contact: www.koolideas.com.au

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