North America: Who will be set for a diesel upturn?
By: John Mortimer, Wednesday, April 29, 2009, AutomotiveWorld.com
One day, the history of the North American light-duty diesel engine will be written and the chapter covering the 2008/9 credit crunch period will make fascinating reading. It might be able to answer the question: How was it that three major engine OEMs - Cummins, Ford and General Motors (GM) all elected at a stroke to delay/cancel/postpone – whatever the appropriate word might be – their 4.5-litre V8 diesel engine programmes?
Did senior executives of the OEMs sit round a table one night and decide: ‘Lets put our new diesel engine programmes on ice. That way we’ll all save a bunch of dollars?’
Certainly, the North American auto industry is in dire straits. No one doubts that. The last thing it needed was to spend hundreds of millions of dollars more on three new diesel engine programmes at a time of financial crisis. Added to which, the price of oil has plummeted, so the impetus has been removed from the need to switch from gasoline to diesel to improve overall fuel consumption.
North America, though huge, is still a ‘small’ automotive community in many respects, with the Detroit area as the hub of motor industry activity. Executives freely switch from company to company, and Chinese walls exist in every business. As it was, all three OEMS had already spent varying amounts of capital on the new engine programmes, which were set to come on stream in the market beginning in 2010.
What is interesting is that one of the three, Ford, could remain the one with the best opportunity to take advantage of any upswing that may soon occur. The company is pushing ahead with plans for its Chihuahua Engine Plant facility in Mexico to produce its 4.4-litre V8, albeit on a very minor scale. Whatever the initial output turns out to be, it will be small compared with the planned output. Volume figures of 20,000 to 40,000 have been banded about – and all heading for Europe, for JaguarLandRover.
But, if and when the upturn comes, Ford will be in an ideal position to ‘turn up the wick’ on its Chihuahua plant and launch diesel versions of F-Series trucks much faster than GM and Chrysler (assuming both are still around as major players). It might take GM, and likewise Chrysler with its Cummins engines, another two years to reach the same position as Ford with vee-engine diesel-powered light-duty trucks.
This could give Ford a useful breathing space in which to bolster its position in the North America market, and re-establish leadership in the classic pick-up truck market.
So, if top executives did sit around a table one night to discuss North America’s future diesel engine market strategy, at least one of them was perhaps casting an astute eye to the long-term future.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Published on Wednesday, April 29, 2009
Free e-newsletters
Our free E-Newsletter service is an excellent way of staying up to date with news and features from around the global auto industry.
