According to this report, Iveco is to hike its prices by 2.5 per cent as of July 1st, and DAF took similar action a month or so back. And according to this piece, Indian OEMs are getting ready to do likewise.
Prices increasing as
demand slackens? Sounds like the beginning of something unpleasant.
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Remember India?
This report pours some fairly icy water on the idea.
]]>Most European truck stocks have been dropping fairly hard over the past couple of weeks, and now we also hear that European freight brokers are raising prices.
What is difficult to establish is quite how a falling European market is going to coexist with a North American market that still shows no sign of life. Those OEMs tied to both - in order of risk we'd suggest Paccar, AB Volvo and Daimler - are going to have a serious job on their hands over the next few quarters.
For Paccar, things look to be especially grim. It is increasingly dependant upon European demand and a strong €uro in order to shore up its North American business. If Europe does drop hard - and we suspect that the fourth quarter of 2008 is going to prove to be very bloody indeed, then Paccar's health is going to take a turn for the worse.
The assorted blatherings of those who point to Eastern Europe as underpinning the rest of the European market need to be taken with a substantial pinch of salt. We're already seeing some signs of softening demand in the accession countries, and a more general European economic downturn isn't going to help.
The European markets have had a good run. But now it's time for a change.
]]>Navistar is confident
about its approach to 2010, according to this piece.
We can't wait to see a
Euro V compliant EGR engine from MAN in service and returning fuel figures.
According to this snippet, Scania has been talking about metal in Russia.
More Ashok Leyland
news here, and the claim that the Indian OEM is looking to 'de-risk its
business model'.
Interestingly, amongst
those new territories likely to be targeted by Ashok is Russia. We're already
seeing something of a squeeze being placed upon existing local OEMs here, with high
end European products from one side, and low tech Chinese from the other. Quite
what a concerted attack from India would do remains to be seen.
In other news, Ashok
has made a strategic investment in the German emissions specialist Albonair. We
don't know the details as yet, but think Euro IV and India some time soon.
On the one hand, we
have Leif Johansson saying that Volvo's outlook for 2008 European truck market
growth remains at 10 per cent.
On the other, we have
Andreas Renschler suggesting that Daimler has noticed a softening in European
order intake.
Can they both be
right?
Ashok Leyland has big
plans to expand capacity, according to this report.
At the same time, it's
also talking about divesting some of its stake in the Nissan LCV JV in which it
is currently the 51 per cent majority owner.
Which, on balance, suggests some confidence in the Indian CV market. Do we share in this?
Probably not.
Remember
Iveco's deal with Tata?
So what are we to make of this news? Much joy and big numbers quoted by Iveco, but, of Tata, not a word. And yet, only a month ago, a deal was being discussed quite openly.
Has it all gone wrong?
Every
now and again, the world tilts upon its axis. But we rarely notice the fact at
the time, as we're too busy trying to maintain a foothold. Quite how history
will treat the second and third weeks in June 2008 remains to be seen, but when
we get to week four, one thing seems entirely probable. The landscape out over
which the global truck industry gazes has changed, and changed fundamentally.
Then up pops the news that DTNA has added Cummins to its engine list for EPA 10. No surprise here insofar as the US truck operator has always asked for a choice of engines. But in as much as the OEMs are desperate to verticalise, and to regain margins from suppliers, this does seem an odd move.
But the real devils exist within the detail. Cummins has proposed an EGR-based engine for EPA 10, and makes a very good business case for doing so. Offering an EGR solution is a move that is utterly, implacably at odds with Daimler's global mindset, which opines that SCR is the way ahead as we move towards a single, global emissions protocol.
This is not an issue of one technology type over another. SCR and EGR are merely different routes towards the same destination, which is legislative compliance. Neither solution can be judged fairly until both have been trialled in a real world, legally-compliant environment by those who are the ultimate arbiters of such things: namely the people who write checks for the same. But enthusiasm for SCR is now obviously on the wane. Let us recap for a moment.
DTNA, AB Volvo and PACCAR are all wedded firmly to a rapid, coherent rollout of SCR within North America post 2010. This is not merely a market-specific strategy, but one that lies at the core of all three companies' global strategic positions moving forwards. All three might have been expected to have come out of the blocks with an enthusiasm for SCR that verges on the evangelical. And yet two of the three - PACCAR remains typically reticent - are now offering the message that other technology types are available. BTW, if anyone still doubt that Cummins remains the big player here, the news that Navistar has added it to the International line up should dispel such thoughts, and should immediately get tongues wagging about the strength of the International - MAN relationship. But we digress.
US truck operators - as with their counterparts in Europe - are faced with an operational environment that is challenging at best. Confronted with two technology types, they are likely surely to opt for the tried and tested, which, in US terms, is EGR. This is not a case of one being better than the other, but of one being more familiar than the other. SCR is a set of letters, EGR is an engine type, and until that changes, then it seems reasonable to assume that it is towards the latter that buyers will be looking.
In order to underpin sales of SCR-equipped trucks, the SCR- supplying OEMs need to confront the vexed question of infrastructure. NO DEF in the tank means reduced torque, disgruntled customers and longer journey times. In a fragile operational environment, this is a risk, and truck buyers are risk averse.
But the message that is now being sent to the likely providers of a DEF infrastructure is one along the lines of 'If you build it, they may come'. The OEMs would very much like their customers to buy SCR-equipped trucks, but, just in case they don't feel like doing so, a competing technology is available. How will the potential infrastructure providers feel about managing this risk? Probably about as equivocal as the SCR-centric OEMs now appear to feel about their core technology. In 18 month's time, there needs to be an infrastructure in place for the supply of DEF throughout North America. The fact that both Volvo and Daimler are now offering an alternative technology type suggests that both OEMs feel that either there won't be, or that demand for such an infrastructure will be muted at best.
This seems like the death knell for SCR at EPA 10. But, at a more fundamental level, it also seems like the moment in which a huge shift takes place. For the past decade or two, the argument has been one of the EU model of truck manufacturing - vertical and internal - raining supreme. Captive is good.
No more. The structural margin improvements that might accrue from such a model now appear to have been placed on one side. Analysts will no doubt take note, and will rate accordingly. The comfortable accepted model that has defined the truck industry for the past few years is now a thing of history. Quite what will come in its place remains to be seen.
]]>Like just how important the Belarus off road market is to Navistar.
Seems a bit odd to be
punting a Maxxforce engine into this part of the world, given that freight
charges from Munich would probably be less. After all, Maxxforce is a MAN engine. And doesn't MAN have a JV with MAZ?
But, then again, it doesn't
need to be Euro V, so it probably doesn't matter.
More scary stuff about the
Indian truck market here.
Unsurprisingly, interest
rates and fuel prices have darkened Ms Jajoo's mood.
There's some curious logic at work here, with the news that Goldman Sachs has upgraded ArvinMeritor.
We're inclined to disagree. There doesn't seem much sign of an upswing in US consumer demand, and the issue of diesel cost is now beginning to have a direct impact upon not just truck demand, but operator solvency. The likelihood of a 2009 upswing prior to the implementation of EPA 10 seems slim to none, and we fail to see where the rising truck demand in the US is likely to come from.
Much of ARM's strategy - at least a third of it at any rate - is predicated on Asian growth, and we are already beginning to see signs that the Indian truck market is beginning to cool. European growth looks likely to be absent next year, and whilst the Russian market still looks to be fairly buoyant, at the core of ARM's predicament is the fact that it produces commodity products in an industry that is fast embracing a verticalised structure.
Ashok Leyland CEO R Seshasayee sounds a rather stark warning here about both Indian
interest rates and fuel prices. A good if not particularly comfortable read, especially for those OEMS with much riding on the Indian business.
Following its downgrade of PACCAR last week, UBS has turned its ire to MAN.
And it will be interesting to see just what public reaction is to the Euro V D20 / D26 engine when MAN finally makes it available to the paying customer. We're rather looking forward to seeing some fuel returns. Then of course, there's the vexed issue of Force Motors.
Suggesting that Munich might not be such a fun place to be at present.