Cat’s 2007-spec C15 engine will be sold through 2009

PEORIA, Ill. – Following months of speculation, Caterpillar has announced that it’s leaving the heavy-duty on-highway truck engine business by 2010, before the next round of emissions legislation kicks in.

"Caterpillar and our dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand," said Douglas R. Oberhelman, Caterpillar group president.

“Nothing changes through 2009,” added George Taylor, director of Cat’s global on-highway business, in a telephone press conference yesterday, meaning current ’07-spec Cat engines will continue to be offered. “The Caterpillar dealer network will continue to service the 1.6 million Cat highway engines out there for the life of these engines.”

At the same time, after yet more speculation and frequent denials, Caterpillar and Navistar announced that they’ve signed a non-binding memorandum of understanding (MOU) that will see them pursue global truck business opportunities together and “co-operate” on engine platforms. The agreement is expected to be firmed up in the coming weeks but the first fruit of this joint effort seems solid – a Caterpillar-branded heavy vocational truck will hit the market in 2010, aimed at construction, oilfield, and other severe-service on/off-road applications.

Significantly, the truck will have a Cat-branded engine manufactured by Navistar, says Taylor.

It’s to be a “purpose-built truck,” according to Phil Christman, vice president and general manager of Navistar’s severe service vehicle center, but it will use some components from existing International 5000 and 7000 Series trucks. It will also exploit Caterpillar off-road technologies and the company’s expertise in designing cabs for such vehicles.

Details are more than a little scant at this point, but the two companies intend to focus on other global truck opportunities, leveraging their considerable joint strengths in truck and engine technologies as well as their distribution assets and capabilities. Cat’s distributor network is especially strong beyond the shores of North America, and the two companies plan to use it to push both medium- and heavy-duty trucks and engines. Navistar stands to win big on this front, gaining instant access to countries where Cat already has a foothold.

"The combination of Navistar’s truck design, development and manufacturing expertise and Caterpillar’s unparalleled worldwide distribution creates a significant advantage for global customers through the ability to offer the right vehicle for the right application through more than 4,700 points of distribution around the world," said Dee Kapur, president, Navistar Truck Group. "The North American Caterpillar distribution system provides expanded reach for severe-service trucks with big-bore power, a segment where Navistar has traditionally not been as focused."

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In addition to the United States and Canada, Navistar has a substantial distribution network in Mexico and Latin America. Caterpillar currently sells on-highway truck engines in Australia and New Zealand, Mexico, and Latin America, as well as in the United Kingdom, Belgium, Russia, China and South Africa.

While Cat dealers in North America won’t be selling International trucks, that won’t necessarily be the case in other countries. The two companies will decide this point on an individual, nation-by-nation basis. International dealers in Canada and the U.S. won’t be selling the new Cat truck.

Cat and Navistar say they’ll 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, both conventionals and cabovers.

They also plan to co-operate on engine development, especially of mid-range diesel engines for applications such as school buses and utility trucks. In the telephone press conference, both Cat and Navistar said pointedly that their engines would not employ urea-based selective catalytic reduction technology to meet 2010 EPA emissions standards.

Interestingly, they didn’t rule out the joint development of a 15-liter on-highway engine in the future. In the foreseeable future, however, Cummins big-bore engines will continue to be the source of serious power in International trucks, alongside the Maxxforce 13-liter engines in 2010. The latter engine was developed by International in concert with German truck and engine builder MAN, and that relationship won’t change for the moment, said Eric Tech, vice president and general manager of the Navistar Engine Group.

Caterpillar’s exit from the on-highway engine business will leave the big-bore spec to Cummins at Kenworth and Peterbilt as well. While Cat had for years enjoyed the lion’s share of business with those two truck makers, that leadership disappeared in the last couple of years. Cummins has increased its share of the Paccar business dramatically, now outselling Cat by a wide margin. But n-highway engines have always been a small part of Cat’s overall revenues, less than 10 per cent.

"In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines," said Cat’s Oberhelman. "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."

Cat and Navistar also intend to expand their existing remanufacturing relationship to include Navistar’s MaxxForce engines, and to pursue additional remanufacturing opportunities as new vehicles and engines are developed.