As the trucking industry navigates the increasingly chaotic regulatory and economic waters, one question is on my mind: are mainstream OEM senior managements wondering if Caterpillar will reenter the commercial truck market?
How many of us predicted CAT would stop making on-highway truck engines back in 2008? Avery Vise, writing in CCJ in July 2008 stated, “Over the past year, heavy-duty truck engine makers have gradually confirmed or announced their on-highway emissions solutions for 2010, but the question had remained: What about Caterpillar? Last month, the company finally declared its 2010 solution: Nothing.”
I recall the trucking industry was, to put it mildly, a bit surprised at that titanic Caterpillar exit. Afterall, the CAT 2006 Annual Report to the SEC state, “Our 2007 on-highway ACERT engine has been validated in the field to meet the new emissions regulations…” and “We believe ACERT provides Caterpillar a valuable foundation now and in the future to meet emissions and performance requirements, and we plan to continue investing in developing and leveraging ACERT Technology systems and components.”
The math in the midst of the Great Recession, according to CAT’s 2008 Annual Report, showed globally, on-highway engines represented just 8% of CAT’s production. North American engine sales and revenue was a mere 10% of total global sales and revenue. CAT boldly stated, “Good companies become great companies when they face and conquer adversity.” CAT calmly stated, “We are weathering this storm, and we will protect and strengthen our company for the best long-term interests of all our stakeholders.” Note there is a tiny footnote on a graph in CAT’s report that states, “In 2008 we decided to exit the on-highway engine business.”
Call me crazy, but today with more than 15 potential Class 7 and 8 truck makers and Messy Middle powertrain manufacturers competing for on-highway market share, why not put yellow iron on the semi-truck poker table as a possibility?
CAT is a powerhouse of a company boasting perhaps 50% global market share in construction and mining equipment manufacturing. It has stiff competition from Komatsu, Deere, Volvo and others. Winning new market share in that space may be challenging, but what if CAT jumped back into on-highway and vocational Class 8 trucks? Could it swoop in and capture significant market share?
CAT’s North American opportunity seems wide open. With changes in the U.S. regulatory market likely significantly scrambling incumbents’ product plans, perhaps all OEM manufacturers are going to need to reset. Maybe CAT, through mergers and acquisitions, or through rapidly adapting and repurposing existing systems, reenters the market with a competitive product.
CAT’s got U.S. production facilities and supply chains. CAT could tap its significant dealership market in the U.S. for parts and service support. Partnered with recent US OEM entrants like a Tesla, Hyundai, or others, could CAT present serious competition to established engine makers Detroit, PACCAR, Volvo and Cummins?
Would fleet customers be asking those traditional OEMs to add Caterpillar back into their option content?
Could CAT gamble and swoop back into the truck market? If getting out in 2008 was because of an undesirable regulatory environment combined with a severe recession, maybe a desirable regulatory environment and challenging economic times might again be the company’s opportunity to jump back into on-highway and vocational trucks.
Changes are all around the U.S. trucking industry. Could this be another one? Just idle speculation on my part, but wouldn’t the trucking world be fired up at that news?
