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US heavy trucks – where next for vertical integration?

With Daimler and Volvo in the North American heavy truck market now both seeking to effectively capture transmission as well as engine business from traditional Tier One suppliers, it is appropriate to ask how much further the move towards European-style vertical integration might progress. In any such analysis, it is important to recognise that, in … Continued

With Daimler and Volvo in the North American heavy truck market now both seeking to effectively capture transmission as well as engine business from traditional Tier One suppliers, it is appropriate to ask how much further the move towards European-style vertical integration might progress.

In any such analysis, it is important to recognise that, in Europe, the engine is crucial in identifying each truck brand. The buyer of a Mercedes-Benz Actros, for example, knows that its diesel engine contributes to the perception of the marque in a way that, for many decades, was unknown in the US and Canada, where the Freightliner, Peterbilt, Kenworth or Navistar customer could choose from any one of, typically, three makes of engine, all outsourced.

Choice of transmission has figured less prominently in European truck buyers’ concerns, although the advance and growing sophistication of automated mechanical transmissions (AMTs) in the last ten years or so has opened up sharper product differentiations.

With Daimler and Volvo in the North American heavy truck market now both seeking to effectively capture transmission as well as engine business from traditional Tier One suppliers, it is appropriate to ask how much further the move towards European-style vertical integration might progress

Among drivers, opinions are divided on the relative merits of Mercedes and Volvo’s subtly different in-house AMTs, which are now set to be re-aired in North America as those easy-shifting in-house transmissions start being promoted by Freightliner and Volvo/Mack respectively as alternatives to the erstwhile standard Eaton and Allison equipment.

It should be added that outsourced transmissions look set to remain well entrenched with Daimler and Volvo’s Class 8 competitors, Paccar and Navistar. Despite Paccar‘s adoption of European engines through its Dutch DAF subsidiary, there is no transmission sourcing line to follow, because all DAF gearbox requirements are met by ZF. Similarly, MAN, which has an engine joint-venture (JV) with Navistar, is similarly reliant on ZF transmissions.

Drive axles are the logical next step in moves towards vertical integration. But all manufacturers recognise that axles contribute almost nothing to the image or reputation of a truck brand. Today their reliability is largely unquestioned. The only reason for a North American heavy truck maker to move away from the two domestic suppliers, namely Meritor and Dana, would be one of cost.

Drive axles are the logical next step in moves towards vertical integration. But all manufacturers recognise that axles contribute almost nothing to the image or reputation of a truck brand

Furthermore, in Europe Volvo drive axles are produced in Sweden under a long-established JV with Meritor, so there is little incentive to ship such axles across the Atlantic when a near-identical product can be sourced in the US. Similarly, most MAN axles are based on Eaton designs, effectively ruling out any MAN-based arrangement for Navistar.

Intriguingly, DAF does produce its own drive axles, at a plant in Belgium. But in view of Paccar’s relatively slow progress in getting production of DAF engines underway at its new plant in Columbus, Mississippi, any tentative plan to build axles in North America must for now surely remain on the back burner.

All four heavy truck builders in the US are now either controlled by – or heavily influenced by – European companies, for whom vertical integration is instinctive. The two key attractions of a) the added-value gained from in-house component making and b) largely captive aftersales and service, benefitting its franchised dealers as well as the manufacturer, are incontrovertible.

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Alan Bunting has a background in engineering, and has been writing on commercial vehicle and powertrain related topics since the 1960s. He has been an Automotive World contributor since 1996.

The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute an Expert Opinion piece, please contact editorial@automotiveworld.com

https://www.automotiveworld.com/articles/95881-us-heavy-trucks-where-next-for-vertical-integration/

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