We've blagged this piece straight from Canadian magazine Today's Trucking.

It details the guidance sent to US engine manufacturers as far as the adoption of SCR for EPA 10 is concerned, and, more to the point, how the vexed question of an empty AdBlue tank might be addressed. EPA wants the OEMs to look at the following ways of discouraging such a prospect.

Driver Warning Systems: Visual and audible alarms informing the vehicle operator that reducing agent level is low and must soon be replenished should be a priority for suppliers, says EPA. "The warning system would need to escalate in intensity as the reducing agent level approaches empty, culminating in driver notification that cannot be defeated or ignored, and cannot be turned off without replenishment of the reducing agent."

Driver Inducement: While in-cab warning systems should prove effective, EPA wants suppliers to have back-up systems in place in case a driver still attempts to operate the vehicle without proper urea replenishment.

A "No-Engine Restart after Restart Countdown" approach, for example, allows a limited number of restarts once the reducing agent reaches a certain minimal level of miles before the vehicle is unable to restart. A "No-Start after Refueling" system has the vehicle unable to start after refueling below a certain level.

Lastly, a "Fuel-Lockout" approach would 'lock out" the fuel filler system, preventing the user from being able to refuel after the reducing agent range drops below a certain level.

"Systems such as these can all operate while some reducing agent remains in the storage tank, thus ensuring emissions controls during all vehicle operation times," EPA states.

Another way to make sure drivers are adding urea when needed is to "have vehicle performance degraded in a manner that would be safe but would be onerous enough to discourage the user from operating the vehicle until the reducing agent tank was refilled."

Most importantly, the system must be able to identify and appropriately respond to a situation when the storage tank is filled with a fluid other than the manufacturer-specified reducing agent, or when diluted with water. NOx sensors or urea sensors, therefore, would also need to be included.

We'd recommend a look at the complete article - makes interesting reading, not least for European's already getting used to the whole vexed SCR debate, but also for the thoughtful take on the pre-buy that EPA 10 is bound to cause.

Confirmation that Isuzu is taking the North American market very seriously indeed.

As we reported last week, it is returning to the US as a truck manufacturer, having purchased a large lump of land in Alabama.

Now here's news of its intentions to establish a Canadian distribution operation, complete with dealerships, and a goal of 2000 unit sales by 2010.

And just for good measure, here's something about Isuzu and India - don't know what weight range, but notable nevertheless.

Eaton's Q1 results are in, and they reflect the turning of the tide in the NAFTA truck market.

The Truck segment posted sales of $576 million, down five per cent compared to the first quarter of 2006. NAFTA heavy-duty truck production in the first quarter was down 23 per cent compared to 2006, whilst medium-duty truck production was down 18 per cent. European truck production was down seven per cent; Brazilian vehicle production was up four per cent.

You can read Chairman and CEO Alexander M. Cutler's spiel here, but the salient point - we think - is this.

"First quarter production of NAFTA heavy-duty trucks was better than expected and should approximate 75,000 units, compared to 92,000 in the first quarter of 2006," said Cutler. "We continue to expect a significant falloff in production in the second quarter, to about 45,000 units. We now estimate the NAFTA heavy-duty truck market in 2007 will total between 215,000 to 220,000 units."

Much has been made of the 2007 doldrums picking up after Q2/3 2007. Freightliner and Paccar have both indicated that this is their respective take on things.

But Eaton seems to be suggesting a longer-drawn out downturn, If we are to believe that everything's going to be just fine again in the run up to EPA 10, then this suggests that the ramp up period for that demand spike is now far less than previously hoped for.

Meaning to our simple minds one of two likely scenarios. On the one hand, the industry restricts capacity until midway through 2008, and then starts to make trucks again, or, on the other, it attempts to maintain that same capacity through the downturn, in order to be positioned to take advantage of an upturn when - or if - it should appear in 18 months or so.

Either option suggests that the OEMs and Tier 1's will have to bear significant costs through the downturn. Given that there's not a whole lot by way of revenue likely to be coming in, this could prove an interesting trick to watch

Ted Bregar has been named as the new GM of Iveco Motors of North America.

So what, you may ask. So we think that IMNA - a Fiat Powrertrain Technologies Company - may yet prove to be a Trojan Horse so far as NAFTA truck business is concerned.

So much for the much-vaunted Q3 upturn in the US heavy truck market.

Here’s news that Paccar is laying off 250 – more than a quarter – of its workforce at its Sainte-Therese, Quebec plant.

Perhaps unsurprisingly, the taxpayers - who ponied up $50 million to keep the plant open in 1999 - are a bit miffed by the announcement, as this article points out with some clarity. One supposes that shareholder value is shareholder value, even if it comes by way of tax dollars.

Anyway. When will the market return? And by how much? And what will be MP's price for doing his business in your town?

News here that Cummins has extended its deal with Volvo, meaning that VTNA will continue to offer the ISX range after the EPA 10 emissions legislation comes into force in two year’s time.

According to FTR Associates, December 2008 order intake fell by 45 per cent y-o-y. Story here.

Guess we'd better be a bit careful here, but let us direct your attention to this blog post, which suggests some significant trouble at Kenworth.

So goes a rumour doing the rounds; we mentioned earlier on that Kenworth appears unlikely to show up. Now it looks like Peterbilt is staying at home too. Robin Easton tells us that "We are still finalizing our plans". To which we would say look lively chap; it opens in 62 days.

And nobody seems surprised. But, what is surprising is that according to this report, it's not going to be ready until late 2010, some time after the January 1st EPA 10 deadline. This doesn't fit with Navistar's previous EGR bullishness, and suggests to us a rather unusually cautious approach.

According to this from Land Line magazine, both Peterbilt and Kenworth have confirmed that they won't be at the Louisville show in March.

Not so long ago, ArvinMeritor stock was changing hands for big money. Its 52 week high stands at $18.11, but, over the last couple of weeks, it's turned rapper and sunk into the 50 cent range. 

Some interesting stuff here.

Albeit from a very small sample size (30 dealers of which 60 per cent are NA-based, 40 per cent EU) the survey suggests that inventory remains a significant problem both in terms of new and used: in the US, 41 per cent of the respondents regard new stock numbers as inflated and 59 per cent are carrying too much by way of new inventory. We'd have thought that the NA market would have solved its new inventory issues by now, but the European numbers (58 per cent of dealerships are overstocked) don't come as a surprise.

Nor do the comments on pricing environment. This shows a general softening in used pricing, and, the report references the increase in a requirement for dealers to take multiple trade-ins on single unit sales. This suggests two potential developments for Europe, and they are not mutually exclusive: on the one hand, with multiple units being chopped in for single unit acquisitions (33 per cent of European dealers), there is an obvious risk to used inventory. Moreover, we get the feeling that beneath this trend, the real direction of the market is one that suggests that emergence from the downturn will be characterized by a markedly smaller vehicle parc than before. A secondary storm is developing quite nicely here.

North America is, as we have suggested previously, a couple of steps ahead in the recovery cycle, but once again, the survey suggests a replacement rather than a growth-based market recovery. This survey points to inventories remaining overly high, and with anecdotal industry evidence pointing in the same direction - NAV is believed to be sitting on north of 12,000 units at present - this is one that needs close attention. The financing environment, however, appears to be normalising in North America, and an end to fiscal stupor looks to be in sight in Europe.

Unsurprisingly, both European and North American dealerships remain cautions about a predicted upturn in either the NA or European markets. U.S. participants expect stable to growing markets, with 47 per cent forecasting y/y sales increases (albeit more muted than industry forecasts) and 29 per cent predicting flattish sales.  European participants on the other hand are less optimistic, with 67 per cent expecting sales to either decline or flatten (split halfway between the two).

We couldn't finish without referencing CS's comments per Navistar. Its survey suggests that 30 per cent of the US dealers polled liked the look of SCR, whilst 53 per cent 'felt more comfortable' with EGR. The note argues that this bodes well for NAV, but this, we suspect, is now an entirely fluid situation, with the jury very much still out. EPA 10 will, in our opinion, see distress purchases (replacement cycle) of one of two technology types, and the end user is more than likely to offer up a pox upon both houses and side with the majority, namely SCR.

CS highlights Cummins as the diamond in the dirt. Too right; whether as a result of luck or judgment, CMI looks well-placed. Should it wish to do business with NAV, we suspect it will have ample opportunity so to do, whilst it also offers PCAR a 15 litre product, a rather glaring omission from the MX line-up. Any discussion of an increase in US GVW brings the 13 vs 15 litre debate firmly back into focus, and on the basis of RV alone, we suspect that buyers in the next cycle will wish to future-proof against any legislative weight change. 13 litres will make a mark, but over time, and, for the moment, we suspect that 15 litres will remain a significant player within the NA marketplace. CMI can also expect some DAI/VOLV business as buyers fight the last battle in the ultimately unsuccessful war on vertical integration within North America.

Moreover, whilst PCAR remains a compelling solution for the what to do with Iveco's +16 tonne business, even bundling these volumes into its engine build total leaves the development of a 15 litre unit as a no-done deal. We shouldn't discount the possibility of a Cummins HD unit returning to Europe at 15 litres. It's not a big market, but one that DAF is excluded from at present. Whether it emerges as a Paccar or Cummins' badged product remains to be seen, but, in some guise, seen it will be.
 

According to this press release, Paccar suggests - or at least appears to suggest - that a pre 2010 prebuy may be on the horizon. Tom Plimpton is quoted thus:

"The general economy continues to struggle.  Reasonable freight tonnage is being offset by challenging economic conditions resulting from depressed residential and commercial real estate construction, lower auto production, reduced capital spending by most industrial businesses and weak retailer sales," said Tom Plimpton, PACCAR vice chairman.  "Second quarter industry truck production in North America and Europe is estimated to be 5-10 percent lower than the first quarter with negative pressure on margins.  PACCAR's second quarter truck production reflects the lower industry output and the company's truck segment gross margin will be lower than the first quarter.  PACCAR continues to rigorously reduce operating expenses to align our business with the current market."  Plimpton added, "There is some encouraging news as national trucking companies are beginning to recognize the benefits of purchasing new trucks later this year as their current vehicles' maintenance costs increase due to the aging of their fleets."

However, the latest from ACT Research suggests that May order intake was too low to suggest any meaningful pre-buy. ACT's  Kenny Vieth argues that a combination of excess capacity and depressed freight volumes are killing demand at the moment, whilst the $10,000 plus price hike at EPA 10 will render demand after January 1st similarly limp.

Contained within yesterday's UBS downgrade of Cummins (from buy to neutral) are some pointers towards the possible buying patterns of North American truck operators as we move towards the 2010 deadline.

http://www.forbes.com/feeds/ap/2009/06/19/ap6564350.html

This should stir things up quite nicely. According to this Press Release, VTNA will deliver its first SCR equipped products ahead of the 01/01/2010 deadline. How will Navistar's lawyers respond, we wonder?

According to this Press Release issued today:

Not, we hasten to add, an allusion to what might happen should it fail to win a significant part of the MATV contract - the winner(s) of which now look likely to be announced at 5pm EST today. Though, it must be said, such failure would be a significant talking point. 

This from Dow Jones

S&P Warns Navistar, Finance Arm May Get Cut To Highly Spec

Standard & Poor's Ratings Services put Navistar International Corp. (NAV) and its financing arm on watch for downgrade, noting a persistent weak outlook for North American commercial-vehicle demand this year and next.

Heavy-duty vehicles such as buses and big trucks have seen a sales slump like their consumer-oriented brethren have. The heavy-duty business, which also includes engine manufacturing, has been offset in part by strength at its military business.

But S&P noted its potential ratings cut on Navistar and Navistar Financial - both of which currently sit one notch above highly speculative territory at BB- - is also reflective of Navistar earlier this week losing out on a $1.05 billion contract for military armored vehicles.

The ratings agency noted while prior ratings didn't account for getting the contract, the Pentagon's decision to give the contract to Oshkosh Corp. (OSK) eliminates a potential benefit for Navistar that would have partly offset the truck-industry woes. Still, S&P expects Navistar to continue generating "significant" military revenue with good profitability.

Orders for new medium-duty and heavy-duty trucks remain low, and S&P believes 2009 sales could decline by 50% from last year's already-weak levels. It would be the third-straight year of declines for the industry.

S&P said as part of its review, it will look into whether weak industry conditions and what it sees as a slower pace of military-truck production could lead the company's free operating cash flow "to turn significantly negative" for the fiscal year ending in October.

It said it also will assess the company's prospects for renewing the $1.4 billion bank credit facility at Navistar Financial.

S&P believes any downgrade would likely be limited to one notch.

Navistar's shares were recently down 3.82% at $40.90. Despite nearly doubling so far this year, the stock is still off about 39% in the last 12 months.

We read reports of Navistar's conference call with the North American media with some bewilderment. This, in Today's Trucking magazine, seems to raise more questions than it provides answers.

So says Hector Maldonado, of the California Air Resources Board, in response to Navistar's decision to file a letter with the federal court as part of its ongoing row with the EPA. Written by Bart Croes, chief of CARB Research and addressed to the Health Effects Institute, Navistar contends that the letter helps show that "skipping the rigors of rulemaking means EPA and CARB have put the public at risk by allowing SCR on the highway now, when it may turn out that the cure is worse than the disease."

We referenced it yesterday, and can now make it available here.

bdns has been bending our ear, and demanding that we refer to this link, in which JC - the booyah one - has some positive to things to say about Navistar. Always happy to oblige.

First off, we would love to have something other to write about than Navistar's self-destruction. Paccar - Fiat Powertrain, Daimler Trucks and divestments - something, anything that doesn't involve Navistar. But it's August, and this one cannot be ignored, so we're indebted to CL for the tip-off.

Over at roadtransport.com, we've been working on the is SCR lethal yes / no / maybe story, and, as a part of this process, have emailed questions to various people - including NAV's lawyers and the Communications departments in both Warrenville and MWM. 

Or would that be a Leap Century? Anyway, today Navistar celebrated 100 years of listing on the NYSE, and "Book-It" Danno rang the bell by way of celebration. Huzzah says us.

Not a particularly clear one it has to be said, but congratulations to Today's Trucking for pinning down RW and getting some words from Warrenville. Today's Trucking, btw, is based in Canada, where SCR appears - says Navistar - to be OK, just so long as you wear a respirator. We digress.

News here of Hino's North American pricing strategy for EPA 10. At $6700 on-cost per vehicle (Hino markets products in Classes 4-7), the Japanese are looking pretty competitive, and are coming in at some $700 more than Navistar's MD range, which will see a price increase of $6000.

Thanks to Kevin Scarbel for the post, and apologies for our laxity as we move offices. Anyway, here's a link to the JP Morgan Diversified Industrials Conference of yesterday and today. Good stuff, and redolent of Ben Travers.

Thanks to CL for the tip-off. 

No surprise, given that it has been shuttered since July 2008, but Paccar has announced that its Madison, Tennessee plant will close permanently as of December 1st this year.

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