Seven out of 10 Class 8 trucks in North America now run with Meritor axles, and the company has plans to grow, including an ambitious schedule of new product announcements.
HDT sat down at the recent Technology & Maintenance Council meeting in Nashville, Tenn., with Chris Villavarayan, who has been president of Meritor Americas for two years.
In 2013, Meritor launched a detailed three-year plan, M2016, designed to help the then-struggling company hit a 10% EBITDA target by fiscal year 2016, along with reduced debt and increased revenue through organic growth.
Today, Villavarayan said, things are looking good and the company is poised for growth.
Meritor’s adjusted EBITDA margin for the first quarter of fiscal year 2016 (which for Meritor ended Dec. 31, 2015) was 9.4%, compared to 9% in the same period last year
Villavarayan said that while Class 8 truck sales have softened from last year, the sky is hardly falling.
“The way I look at it, it’s still one of the eight best markets in the last 30 years,” he said. “You can’t complain coming off of a high of 328,000.”
In fact, he said, “I see it as two markets of about 290,000.”
In addition, he noted, “heavy duty is coming down, but medium duty is strong,” and pointed to its new lighter-weight 13X drive axle platform designed for Class 6 and 7 applications.
Meritor is increasing the pace of its new product announcements, “filling gaps in our product portfolio,” Villavarayan said.
For instance, at TMC Meritor unveiled a new integrated front axle, the MFS+. It's a lighter-weight steer axle designed to be 85 pounds lighter than the current offering (even more savings with air disc brakes).
At the same show, it accepted an HDT Top 20 Products award for last year’s introduction of the Meritor Tire Inflation System for trucks.
Earlier this year, its aftermarket division unveiled products such as the PlatinumShield III Coating for brake shoes, an all-makes clutch line, the FastSet King Pin Kit, and the AllFit SimpleCheck air brake stroke measurement tool.
The company has averaged two or three product launches per year in the past, but to meet its growth targets, Meritor is planning to launch 20 new products over the next three years.
Villavarayan outlined how the company has made changes to help bring new products to customers. Instead of axle teams working separately from driveline teams and brake teams, he said, they put them together. The result is you “can better integrate and make things disappear,” such as torque plates and spiders, saving weight.
When asked about the effects of the company on vertical integration, where truck makers such as Daimler Trucks North America are now building their own axles, Villavarayan pointed out that Meritor has maintained significant share with Daimler even since the truck maker started offering its own axles.
“If you’re running a mixed fleet,” he said, going with a third-party axle rather than with the OE offering allows companies to run a more consistent drivetrain package.
In the end, Villavarayan said, “we have to listen to the customer.” Three years ago, he said, “we said instead of telling customers what they should buy, we went to customers and asked, ‘What is your pain point, what is your friction,’ and developed products that drive that.” An example, he said is the MTIS for trucks.
Now that Meritor is well on its way to meeting its three-year goals, Villavarayan said, “The next three year plan is growth.”
Realizing that there’s only so much room to grow in the commercial vehicle space, he said, Meritor will look to grow its presence in the off-highway space as well as in components, for instance on transmissions.