Cummins, the US-based manufacturer of heavy-duty engines, is upbeat about automotive business prospects in Europe and high-growth emerging markets in spite of the demise of the company’s traditional heavy-duty clients in the UK.
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This was the central message delivered by Cummins executive Hugh Foden to trade journalists in London this week.
Foden said that the demise of small UK freight truck manufacturing firms who were long-time Cummins customers, such as Seddon Atkinson, Foden (yes, there is a family connection but it is incidental) and ERF, has sometimes led people to conclude that Cummins is pulling out of the European truck and bus sector. Foden stated categorically that ‘this is not the case’ adding that Cummins in Europe achieved record sales last year.
Dutch-based DAF (part of PACCAR of North America) and Turkey’s BMC are now major customers for its engines in Europe.
Foden said that over the last five years the company has been shaped into ‘The New Cummins’ and that over 50% of its business is now outside of North America, creating a company that is ‘less cyclical, more diversified, more results-oriented’.
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By GlobalDataIn terms of Cummins’ automotive business, Foden emphasised the role of high-growth emerging markets and Cummins’ long history of presence in places like China and India.
“For years Cummins has been the largest diesel engine investor in China, with our first venture dating back over thirty years. China is in the midst of the largest highway-building effort in history and is expected to have a motorway system second only to the US by 2010,” said Foden.
“The expansion of the motorway system will allow larger trucks to carry more goods across more of China, fuelling demand for increasingly powerful heavy-duty trucks. The country plans to implement Euro 3 equivalent emission standards that will dramatically push forward the technological advancement of diesel engines.”
Foden maintained that Cummins is well placed to meet future demand with two joint ventures in China. Dongfeng Cummins will develop a 13-litre engine for heavy-duty trucks above 40 tonnes gross weight. The engine platform is being developed so that it can be readily modified to meet future US EPA and Euro 4/5 emission standards and production is expected to start in 2009.
Cummins has also signed an agreement with the Shaanqi Group to form the Xi’an Cummins joint venture to produce the ISM engine (for 26-44 tonnes GVW trucks).
In the lighter duty area, the ‘Beijing Foton’ partnership will develop 2.8-3.8-litre diesel engines for light commercial vehicles. After a feasibility study, production could start in 2008. Foton produced 260,000 light trucks in 2005.
Cummins has also signed a JV with Kamaz in Russia. ZAO Cummins Kama will produce B Series engines from 120-275hp starting this year.
Earlier this week Cummins announced an agreement with PACCAR for its 6- and 8-litre engines to be installed exclusively in Peterbilt and Kenworth brand medium-duty commercial vehicles in North America. Cummins and PACCAR are developing proprietary configurations for the engines which will be badged as PACCAR engines.
In Europe, Cummins is supplying over 25,000 truck and bus engines per annum to customers such as DAF and BMC in Turkey and Foden said that he expects further growth ‘including a significant new customer that will be announced at the Hannover Truck Show in September’.
