Thursday, November 26, 2009

Freight Truck Manufacturers As Well As Hauliers May Have To Consolidate

Survival of the Fattest may be the way to Survive Hard Times
Shipping News Feature

US – EUROPE – The heavy truck and lorry market has been suffering more than most sectors in the recent downturn. The future for the industry depends on modernisation and reform and the production of lighter commercial vehicles looks a lot more hopeful and innovative than their bigger brothers of Class 8 (over 15 tonnes) and above. We have seen real inspiration by many manufacturers, both established and new players, in the drive to produce more efficient and cleaner electric and hybrid vehicles in these smaller classes.

The heavy truck sector was always going to be a harder nut to crack and with many famous names like Kenworth, Peterbilt and DAF already consolidated under the PACCAR banner and other premium brands such as Mack, as previously reported, now part of Volvo (who also absorbed GMC and the legendary White Trucks in the 1980’s) it seems the drive for efficiency and economies of scale may soon see more major adjustments.

News that Hakan Samuelsson has parted company with MAN after almost five years means that talks which may see Scania (Swedish born Samuelsson’s previous employers) join with MAN under the Volkswagen group name. VW have never been slow to extend their reach in the automotive industry and have a good record for rationalising and upgrading those who fit under their umbrella.

VW are believed to currently own around 30% of MAN who are highly thought of by industry investors. The consolidating of the three companies would reaffirm VW’s commitment to the truck market which up to now has been doubted by many observers. The amalgamation is considered by analysts to have the potential to save circa €1 billion in production costs through rationalisation.

MAN are in fact currently the third largest big truck manufacturer behind Volvo and Daimler and therefore would push a VW controlled group right up to or around the market leaders position.

Meanwhile Chrysler, who entered into an agreement in January with Fiat, is now considering moving into the truck market themselves. Fiat picked up 35% of Chrysler for free in the deal which also saw the US government bail out the car maker to the tune of $7 billion at the time. Now it seems that Fiat are showing some of their flair for development by drawing on the resources of their wholly owned subsidiary with a view to selling a Chrysler rebadged Iveco range in the States.

With Daimler controlled Freightliner and independent Navistar still the dominant brands of Class 8 in the US it will be fascinating to see how this market develops if the VW and Chrysler moves do progress, not least because these groups are dominated by the European approach to truck building with flat faced rigs de rigeur, as opposed to the bull nosed cabs so prevalent in the USA. The rangy long haul style of cab so favoured by American truck drivers will be hard to displace, the difference in European length regulations mean that the cabover style used on the continent will always be an essential part of heavy truck design.

Whether US trucking companies can be persuaded to change on economic or environmental grounds is open to question; without the acceptance of the squatter cab style the traditional US brands are likely to dominate their home market for years to come if retooling and redesign of EU lorries to suit the market proves, as suspected, to be simply too expensive.

Photo: courtesy MAN.