Trucks that achieve 10 miles per gallon will be a reality over the next 10 years, supplier company executives learned recently. “We’ll need our suppliers to make that happen,” said Martin Daum, president and chief executive officer of Daimler Trucks North America, while addressing the 20th annual Heavy Duty Manufacturers Association Breakfast and Briefing in Louisville, Ky., on Friday, March 26.
Fuel efficiency increasingly will become important, said Daum, citing U.S. Department of Energy estimates of $3.89 per gallon diesel by 2014. While the U.S. Environmental Protection Agency’s emissions mandates dating to 2002 have added more than $20,000 to the price of a new truck, they have not provided value for customers, he said.
Future product innovations will be driven by the market, not legislation, so higher costs will be offset by fuel efficiency. Improvements in energy management, engine efficiency and driving resistance will need to pay off for customers within two to three years, Daum said. “We have to invest today so we don’t wake up tomorrow at $5 per gallon and be surprised when we don’t have the solutions for our customers.”
Success will require companies such as DTNA to have a flexible production footprint, Daum said. Downturns must be offset by more flexibility in the U.S. work force, such as working overtime one day and shutting down the next day, a concept that is already in place at DTNA’s Freightliner plant in Saltillo, Mexico. “If the unions don’t step up, more and more production will move to Mexico,” he said. Other areas of focus for DTNA are strict cost controls, leveraging products globally – as the company has done with its engine platform – and building strong relationships with global suppliers.
Daum predicted truck sales will be at least 10 percent better in 2010 than in 2009, an improvement he admitted was not really growth in light of 2009’s low volumes, “but more avoidance of disaster. It’s far away from normal business.” Daum said the industry saw a preorder spike in the fourth quarter of 2009 when fleets bought the last of the pre-2010 engines, which led to a dip in the first quarter of 2010. Daum predicted a slight increase in orders for the remainder of the year and said that DTNA is sold out until the end of June.
Eventually fleets have to buy trucks, “but they don’t have to do it this year,” Daum said, referring to the practice of running trucks longer during uncertain economic times. He predicted a 33 percent increase in truck sales in 2011 over 2010. “I hope I am wrong and those numbers are far better,” Daum said. “That would be good for everybody.”