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Fiat-Chrysler alliance could threaten Cummins mid-range engine business

Despite possible significant potential for Daily van distribution through Chrysler’s North American dealer network, the proposed ‘global strategic alliance’ between Fiat and Chrysler promises to do very little to address the volume-related challenges faced by some other key parts of Iveco. Chrysler, in common with its North American rivals General Motors (GM) and Ford, long ago withdrew from the heavy truck business, the sector where Iveco arguably needs a partner to share manufacturing and future product development costs.

Under its Dodge brand name, Chrysler is a major player in ‘trucks’ – which in North American terminology means pick-ups and minivans. The Dodge Ram pick-up range is a strong challenger to Ford’s F-Series for market leadership in the US and Canada. Nowhere is the competition between them keener than in the heaviest weight segment of up to about 6.5 tonnes gvw, where many vehicles are equipped with towing hitches enabling them to be operated at a train (ie all-up) weight of 10 tonnes or more.

Diesel power predominates in that heavy pick-up sector. In Chrysler’s case the Ram range is powered exclusively by Cummins. Ram business accounts for far and away the largest percentage globally of Cummins’ well-proven 6.7 litre in-line six-cylinder ISB diesel business. Under a contract signed during the last months of the DaimlerChrysler regime, Cummins is developing an all-new smaller – and EPA 2010 compliant – diesel of around 4.5 litres capacity, for use by Dodge in both heavy and lighter-duty pick-ups, with potential further applications in Chrysler SUVs and passenger cars.

And here we come back to the intended Chrysler-Fiat engagement, if not eventual marriage. Under the banner of what has, since March 2005, been Fiat Powertrain Technologies (FPT), the Italian group produces automotive diesels in almost every power bracket. Most significantly it offers the 4- and 6-litre Tector range. These are engines developed during the late 1990s under the EEA (European Engine Alliance) joint venture between Fiat and Cummins. The first Tector engines were virtually identical to their Cummins ISB counterparts, differing only in their fuel system electronic controls.

By all accounts, relations between the EEA partners were far from smooth. Cummins allegedly accused the Italians of reneging on an agreement that Fiat would not tout for outside, on-highway business. Although not publicly acknowledged at the time, co-operation was strained and the EEA was quietly dissolved about five years ago. And when Cummins embarked on an ISB update programme to meet Euro 4 emission laws – which involved, fundamentally, an increase in bore and stroke – the company bent over backwards to prevent Fiat engineers getting access to the finer details, including those cylinder dimensions.

It seems highly likely that Cummins, with its future Chrysler engine supply business on the line, will be sure to remind its most important North American mid-range engine OEM customer of its own experience of co-operating with Fiat. Should the Fiat-Chrysler alliance get the green light, then clearly FPT will be looking for a diesel engine supply opportunity. This may threaten Cummins’ mid-range diesel engine business in the longer term. However, the good news for the US engine supplier is that it is now almost certainly too late in Chrysler’s new-generation Ram development programme, based around a compact V8 power unit, to substitute an in-line Tector engine for the present, outwardly identical, ISB.