The impact of 2002 emissions standards on price and performance is a hot topic among truck buyers,
but Steve Keate, president of International Truck & Engine's truck group, said pre-buying to beat the October changeover “is definitely not in the best interest of the truck manufacturing industry.”
Manufacturers and dealers, he noted, have suffered through depressed demand, production cutbacks, and layoffs over the last couple of years. “The last thing this industry needs at this point is a short-term bump in demand followed by a significant falloff after October.” Keate was not ready to discuss specifics, but said International is committed to managing production rates in order to avoid a boom/bust situation.
New emissions standards required for most heavy duty diesel engines could add $3,000 to $5,000 to the price of a new truck and reduce fuel economy by 2-5%, depending on the application and the engine, Keate said. International engines are not part of the group which, through an agreement with the U.S. Environmental Protection Agency, must comply with 2004 standards by October 2002. However, Keate said the company has invested millions of dollars in modifications to International trucks to accommodate other manufacturers’ engines.
International trucks will be available with Cummins and Caterpillar engines after October, but not Detroit Diesel. The decision was a difficult one, but “we just can’t try to be all things to all people,” Keate said. “It comes back to what we’ve been saying for a while, which is that to be successful you’ve got to leverage scale. You’ve got to have the R&D capability and volumes necessary to support the kind of investments we’re talking about. You have to be focused.”
As for the decision to drop Detroit Diesel, “it didn’t make any sense for us to continue to invest our resources in a company that, quite frankly, is owned and controlled by a primary competitor.” Detroit Diesel is a subsidiary of Freightliner parent, DaimlerChrysler.
Resale values of late model used trucks may get a boost if buyers opt for used rather than new trucks. After a 50% drop for some models, used truck prices have stabilized over the last 12 months. They haven’t gone up, he added, but there’s been no further deterioration. International has been able to reduce its inventory of used Class 8 sleeper trucks by 40% over the past year. “We tried to manage this really difficult situation prudently,” he said. “We feel pretty good about the fact that we didn’t get into the guaranteed buy-back and guaranteed residual game.”
International also continues the parade of new products in its High Performance Truck series. March will see a new 4200 medium duty model featuring a new VT365 mid-range engine that will replace the 4700 V6. Keate said the VT365 meets clean air standards yet has “pretty significant” fuel efficiency. It will also feature International Intuitive Shifting controllers that integrate engine and transmission.
Also in March, International will begin offering an extended cab option that adds 26 inches to 4000 and 7000 series cabs as well as the 8500 regional haul tractor. Features include increased passenger seating and a rear cab swing-out window for ventilation and enhanced visibility.
The International/Ford Blue Diamond Truck Co. joint venture is on track to launch a new medium duty chassis later this year. Ford and International will put their own cabs on the chassis, which will be built in Mexico. Keate said those International trucks will be sold in Mexico and South America. Medium duty trucks for U.S. customers will continue to be produced at the company’s Springfield, Ohio, plant.
Blue Diamond is also working on a Class 3-5 product line to debut in late 2003 or early 2005. Keate said it will use a modified Mazda cab, an International V6 engine and a Ford transmission. “We’ll make sure there is as much differentiation as necessary so our International product is consistent with the International brand and the Ford product is consistent with the Ford brand.”