V. Sumantran joins Hinduja Automotive

The newly formed Hinduja Automotive UK has appointed Dr. V. Sumantran, former General Motors and Tata Executive, as Executive Vice Chairman of the company. This appointment reinforces the ambitious expansion plans of the Hinduja Group in auto and auto-related businesses globally, including green field operations and new acquisitions.

Dr. Sumantran, along with Mr. R. Seshasayee, Executive Vice Chairman, Hinduja Automotive, and Managing Director, Ashok Leyland Ltd., will be responsible for the further development and execution of the growth strategy and for the overall performance of the global automotive portfolio of the Hinduja Group.

Dr. Sumantran's extensive global experience includes most recently his own auto industry consultancy practice, where clients included the Hinduja Group. Prior to this, he was the Executive Director of Tata Motors Passenger Car Business and Engineering Research Centre.
In his earlier career, Dr. Sumantran had spent over 16 years at General Motors Corporation, mostly in Detroit and later in Europe, where he served as Director, Advanced Engineering, SAAB Automobile.

In recent months, the Hinduja Group companies have forged major international technology partnerships in the areas of castings, vehicle electronics with Continental AG and are partnering Nissan Motors in a $500 million foray in to the LCV segment. The group has also invested considerably in expansion of capacity in CV manufacturing, foundry, engineering services and environmental technologies.

"Dr. Sumantran's induction into the Board of Hinduja Automotive Ltd., is a strong step towards realization of the group's goal to become a leading player in the global auto industry", said Mr. G.P. Hinduja, Chairman, Hinduja Automotive Ltd."At this exciting point in the development of the Group's automotive business, the appointment of this senior automotive professional with global manufacturing and engineering experience will be a major boost to our growth plans", commented Mr. D.G. Hinduja, Co-Chairman, Hinduja Automotive.

Manatec targets Rs. 100-crore turnover: New plant to be ready by year-end

Manatec is among the well-established brands of garage servicing equipment in the country. Started in a small way around 20 years ago, the company has grown by leaps and bounds, driven as it is by indigenous technology. The company has been able to maintain a steady growth even during the recessionary phase in the automotive industry because of its technological excellence and sustained R&D efforts.

In an informal chat with MOTORINDIA at the recent CII (SR) annual session in Chennai, Mr. R. Mananathan, Managing Director of Manatec Electronics Private Ltd., said he is really proud of being an Indian as he could make his products based on Indian technology popular worldwide despite stiff competition from overseas manufacturers.
In fact, there are only a very few Indian manufacturers of garage equipment. Manatec’s strength lies in the fact that right from the beginning, it has been focusing on indigenous technology of world standard. This has enabled it not only to keep afloat in this competitive field but also emerge successful.

He said the company’s performance in 2007-08 was quite satisfactory, with a turnover of Rs. 38 crores. It targets a turnover of Rs. 60 crores for the current year and Rs. 100 crores by 2010. Over one-third of the total turnover is earmarked for export.

Further, Manatec is setting up a new state-of-the-art plant in Pondicherry at an investment outlay of Rs. 10 crores. Commercial production at this plant is expected to commence by the year end. The new plant would help bring the company’s manufacturing operations in Pondicherry under one roof.

Truck Writers Award for Mike Pennington

Mr. Mike Pennington, ArvinMeritor's Senior Director of global marketing communications and industry relations for commercial vehicle systems, was honoured with the 2008 Lifetime Achievement Award sponsored by Peterbilt and voted by the journalist members of the Truck Writers of North America at Mid-America Trucking Show.

The presentation made at the group's annual banquet was applauded with standing ovation by the audience, with special compliments paid by David Giroux, who holds the equivalent communications position at Peterbilt, to Mr. Pennington.

After earning a bachelor's degree in journalism from the University of Memphis, Mr. Pennington began his trucking industry career on the editorial staff of the Memphis-based Southern Motor Cargo, a regional trucking magazine. He left it in 1985 and joined ArvinMeritor, when it was still Rockwell Automotive, as manager of product publicity and business relations, and rose to become the Director of Marketing Communications - Americas before he was promoted to his present position.

“Mike is the consummate communications pro, the one that most others aspire to be. All of us here offer him our congratulations, as well as our thanks for many years of his willing assistance", says Today’s Trucking editorial director Rolf Lockwood.

Cummins bullish on growth prospects

Cummins Inc. registered a record sales and earnings in 2007, the fourth straight year of superb financial performance for the company. Cummins' sales rose 15 per cent to $13.05 billion, from $11.36 billion in 2006. Net income rose to $739 million, a three per cent increase compared to $715 million in 2006. Earnings before interest and taxes of $1.23 billion, or 9.4 per cent of sales, represented a four per cent increase when the company earned $1.18 billion, or 10.4 per cent of sales.

The record results came despite the expected significant drop in the North American heavy-duty truck market as a result of emissions changes that took effect on January 1, 2007. Industry-wide sales in that market declined nearly 50 per cent in 2007, but Cummins' increased share in that market as well as strong growth across most of the rest of the company's businesses and regions more than offset the decrease.

"2007 was an outstanding year for Cummins," said Chairman and Chief Executive Officer Tim Solso. "This record-setting performance in the face of significant challenges validates our message that Cummins truly has become a more diversified, global power leader. Most importantly, our efforts continue to benefit our shareholders who have enjoyed an average annual return of over 55 per cent on their investment over the past five years."

Cummins' fourth quarter sales of $3.5 billion also were a quarterly best for the company, and were 16 per cent higher than the same period in 2006. Net earnings for the quarter increased five per cent to $198 million from $189 million during the same period in 2006.
Although revenues were higher in the engine segment, profits were lower for both the fourth quarter and the full year due to costs associated with the release of new products in North America to meet the 2007 EPA emissions regulations.

The engine business also invested heavily around the globe for capacity expansion and new products. Notable investments include the light duty diesel engine program in Columbus, Indiana, and the two light commercial vehicle engine platforms for the Chinese truck market. These two new platforms for this rapidly growing 1.1 million unit market in China will be manufactured as part of the company’s joint venture partnership with Foton.

At the same time, Cummins also gained a significant share in key engine markets during 2007 – especially in the North American heavy-duty truck engine market, where its market share exceeded 40 per cent for the last nine months of the year. The company's 2007 product, which is based on Cummins' proven cooled exhaust gas recirculation technology, has performed as well as expected and has been well-received by customers.

Outlook

The company expects to extend its record financial performance to a fifth straight year in 2008. Sales are forecast to increase 12 per cent from 2007 levels and the company expects to generate EBIT of 10 per cent of sales in 2008.

The company's financial performance over the last four years has resulted in a strong balance sheet, which has given Cummins the flexibility to invest in the people, products, facilities and technologies necessary to take advantage of growth opportunities around the world. It expects to spend between $550-600 million on capital projects in 2008.

The company expects the North American truck engine markets to rebound somewhat from 2007 despite the uncertainty that exists in the US economy. Additionally, Cummins expects to maintain its market share gains from 2007 in key segments such as heavy duty and medium duty truck and bus.

Truck industry's major contribution in freight movement

The US trucking industry in 2006 hauled more goods in a single year in 2006 than ever before.

ATA reports that the trucking industry hauled 69 per cent of the total volume of freight transported in the US in 2006. This equates to an all-time high carrying load of 10.7 billion tons, and $645.6 billion in revenue, representing 83.8 per cent of the nation’s freight bill.

“Americans should understand that their national economy is directly linked to freight transportation,” said ATA President and CEO Bill Graves. “Trucking is the driving force behind our great economy. Safe, reliable and efficient motor carriers enable businesses throughout the entire supply chain to keep inventories lean, thereby saving the economy billions of dollars each year”.

ATA reported that more than 26 million trucks of all classes played a part in reaching the tonnage milestone. Of this, 2.9 million were typical Class 8 trucks operated by more than 750,000 inter-State motor carriers.

Class 8 trucks drove 130.5 billion miles of the total 414 billion miles traveled by all weight classes used for business purposes in 2005. The nation’s truck fleet consumed 52.8 billion gallons of fuel, both diesel and gasoline. The trucking industry spent about $111 billion on diesel fuel in 2007, up from $103.3 billion in 2006. Commercial trucks paid $35.2 billion in federal and State highway-user taxes in 2005.

The trucking industry continues as a major employer in the country. Nearly 8.7 million people were employed in trucking-related activities across all US industries in 2005. Of these, 3.4 million are professional truck drivers.

Trucking also played an important role in trade exchanged between the US and two of its largest trading partners, Canada and Mexico. Trucks transported 80.7 per cent of the value of trade between the US and Mexico in 2006 and 64.4 per cent of the value of trade between the US and Canada.

International Lonestar: 'The Big Daddy' of American trucks

The deep-throated roar of a big bore diesel engine wrapped in a sleek chrome grill announced the arrival of the world's most innovative big-rig truck. Navistar International Corp. unveiled its International brand's new flagship product, the visually stunning and technologically advanced LoneStar, at the Mid America Truck Show.

With a striking, aerodynamic appearance and breakthrough functional innovations inside and out, the International LoneStar is the result of extensive customer research and automotive-inspired design - a new truck that changes the game for today's trucking professional. It creates a new category of Class 8 trucks called "Advanced Classic", in which technology and innovative styling converge with next-generation aerodynamic design to deliver superior fuel efficiency. LoneStar also sets a higher standard for comfort, through improved ergonomics, an industry-leading suspension, advanced electronics and a quiet cab.

"This truck is unlike anything on the road today," said Daniel C. Ustian, Navistar Chairman, President and CEO. "The International LoneStar closes the gap between workstyle and lifestyle for driving professionals, combining peak productivity with emotional appeal. It is the product of Navistar's culture of relentless innovatation, and embodies the spirit both of today's driving professionals and the dynamic, transforming energy inside our company."

Said Mr. Dee Kapur, President, Navistar Truck Group: "Our customers told us they want three things: A truck that makes a statement about the driver, comfort on the road whether working or resting, and the combination of fuel economy and serviceability that helps them make more money. LoneStar delivers on all accounts. Now, drivers don't have to compromise. They can have it all - looks, efficiency, comfort, functionality and productivity."

LoneStar is a breakthrough product that resulted from a breakthrough process. The truck progressed directly from math and clay models to production - without any development prototypes.

"Our engineering team, which has diverse backgrounds in the automotive, aerospace and trucking industries, felt confident that we could develop this truck without spending months in prototyping. We knew we had a winning truck, and we wanted to make it available to our customers as soon as it could be ready", said Tom Baughman, Vice President and General Manager, Navistar Heavy Truck Vehicle Center.

In an average week, a truck driver may spend 120 hours in his or her truck – driving, eating, sleeping, running a business, even entertaining friends. “We designed the LoneStar's environment to be both highly functional and comfortable. No other truck's interior delivers the style, comfort and practicality we have built into the LoneStar", said David Allendorph, Chief Designer for Navistar's Truck Group.

Fuel efficiency is increasingly important for truck owners. LoneStar is projected to be five percent to 15 percent more fuel efficient than classic trucks, equating to an annual savings of $3,000 to $8,000.

"The aerodynamic design of LoneStar's hood, windshield and side skirts will save them real money. Truck pros can have a unique, customizable truck that will reward them at the pump. When you are spending $1,000 or more with each fill-up, you really appreciate the fuel efficiency of the LoneStar", Allendorph observed.

The distinctive grille and sloped hood were inspired by International's D-Series trucks, which helped transform America's cross-country transportation in the early 20th Century. A restored and modified example of that truck, the DMAXX, also is on display at the International booth.

The LoneStar will be available for order from nearly 900 dealer locations in North America beginning in April 2008. Production of the trucks will begin in August 2008 at Navistar's plant in Chatham, Ontario, Canada and will be delivered to customers in fall 2008.

In addition to the LoneStar and DMAXX, other Navistar vehicles at the Chicago Auto Show include the International MaxxPro, Navistar's mine-resistant military vehicle that helps protect the US military from roadside bombs; a military version of the International MXT that includes Raytheon's advanced medium-range air-to-air missile (SL-AMRAAM) launcher; and the civilian International MXT, an extreme pickup truck launched at the Chicago Auto Show in 2006 that can haul nearly eight tons and tops out at $135,000.

Growth opportunities in North American truck after-market

Consolidation characterizes the current business environment in the North American heavy duty truck after-market which continues to witness greater truck complexity, a declining skilled worker population and distribution channel cost compression.

Demand for on-road freight hauling continues to rise along with the number of vehicles. The number of class 3-8 commercial vehicles is rising at a CAGR of two per cent and is forecast to top 11.4 million by 2014. "The North American heavy-duty truck aftermarket is faced with a multitude of challenges and opportunities related to service, distribution, consolidation and advanced technology domains," notes Frost & Sullivan Consultant Mary-Beth Kellenberger. "The future of the aftermarket will depend greatly on the agility shown by market participants to integrate advanced technologies that complement service and maintenance initiatives, reduce downtime, offer greater control on supply chain and distribution flows, and manage inventory."

Technology drives revenue opportunities in this market and needs to be used extensively to meet the challenge posed by the technician shortage. Advanced diagnostics and prognostics capabilities can help meet service and maintenance demands while also helping to reduce downtime. Technology accelerates the distribution flow and creates standardized operating procedures that increase efficiencies and provide insight into the entire supply chain. Therefore, technology helps to control supply chain variability.
With greater consolidation within the heavy-duty aftermarket parts and service structures, distribution mechanisms and flow channels struggle to cope with downtime and cost issues associated with this change.

"Moreover, original equipment service (OES) channels are amassing a greater share of the aftermarket revenues, driven by the increasing prevalence of proprietary technologies in commercial vehicles. That being said, OES channels are struggling to keep up with demand, thereby offering opportunities for independents to partner with these channels to support their businesses", noted Frost & Sullivan Program Manager Sandeep Kar.

"In addition, increasing distributed electronic content in commercial vehicles is forcing the need for new technology and equipment acquisitions by product and service providers, in turn inflating product and service costs. There is also a need to streamline the parts distribution structure to improve product and service flow", he added.

Market conditions demand strategies that provide cost-effective technology integration of the aftermarket distribution system, product development and service flow. Over the short to medium term, consolidations will continue to influence the demand from large fleets. However, independent suppliers and providers of service, maintenance, and parts must retain their interest in small-medium sized fleets and owner-operators who aim to reduce the downtime of their mobile resources.

Tremendous growth opportunities exist for companies that cater to the product and service needs of local markets and the smaller and medium-sized fleets with a broad spectrum of vehicles.

Economic downturn impacts truck industry

The year 2007 proved a tough period for the trucking industry. The total market for heavy trucks (Class 8) in North America declined by 40 per cent to 207,847 trucks, compared with 348,866 trucks in 2006. The decrease is a consequence of large pre-buy volumes during 2006, the softer US economy with lower freight volumes during 2007 and a drop-off in housing construction. It was difficult for manufacturers to anticipate the extent to which freight conditions and the overall economy worsened as the year progressed.

The housing downturn and the related mortgage crisis significantly affected truck tonnage. In 2007, new housing starts were markedly down by 24.7 per cent from 2006. The damage is extending into 2008, with February home starts down 28.4 per cent year-over-year.

In January, new home sales were at their lowest level since 1995. Home sales were struggling before the sub-prime crisis, but it has now become even more difficult for consumers to receive home loans. Without strong consumer demand for building materials, there is less housing-related freight to transport.

Large fleet customers have been severely impacted by this weak freight environment. Though there was some pickup in tonnage during the last part of 2007, tonnage levels remain below what they were during the first half of 2006.

Is there light at the end of the tunnel? The American Trucking Association's (ATA) truck tonnage index has increased over three consecutive months, but they hesitate to say whether freight is truly recovering. Cuts in consumer spending due to record fuel prices, as well as decreasing home values and an unstable job market could cause further weakness.

And industry experts differ in their opinions on tonnage forecasts. ACT Research is now projecting a decline in tonnage for 2008. Now that final data has been collected, ACT has revised its estimated tonnage forecast just this month to reflect a 2 to 3 per cent decline from previous levels through the first two quarters of 2008.

With the economic stimulus package recently signed by the US President, and the Fed acting to decrease its rate by another three-quarters of a point to 2.25 per cent, the economy should be moving toward recovery by the second half of the year, but there are clearly no guarantees.

Diesel fuel prices also made news in 2007, as temporary shortages of experienced personnel, equipment and construction materials in the oil industry contributed to the rising costs. The additional adverse factors are the increasing global demand for diesel and political instability in major oil-producing regions. Oil prices have been pushed to well over the sustainable level, to around $110 per barrel. At nearly $4 per gallon, fuel expenditures continue to significantly eat away at our customers’ bottomlines, which in turn affects truck purchases.

ATA is now predicting a nearly 20 per cent increase in fuel expenditure by the trucking industry, which could further delay a recovery in truck purchases. In fact, ATA confirms that for some fleets fuel costs are beginning to overtake labor costs as their largest single expense.

Last year, Class 8 market share slipped below expectation primarily due to deteriorating freight conditions which affected the large on-highway fleet operators.

Demand in North America remains low, reflecting the weakening economy. This has resulted in lower profitability in the transport industry along with a relatively high level of inventories of new trucks at the dealers.

Market forecasting is difficult, but current expectations are a demand for trucks in 2008 on the same level as in 2007. The North American market for Class 8 trucks is expected to face major challenges over the next five years due to a sluggish economy and a major change in emissions legislation due in 2010.

North America the world’s largest truck and trailer market

By K. Gopalakrishnan

It was my first opportunity to visit the world's most powerful nation to attend the Mid America Truck Show, the largest show for the truck industry in the US. The Mid America truck show is an annual event held in Louisville in Kentucky State. Despite the economic downturn and negative growth in the truck industry, this year’s show was the largest ever with nearly 1,175 companies participating in the event. More than 75,000 trucking professionals visited the show.

It was the not the best of time to write about the US truck industry as the market for class 8 trucks dropped by 40% in 2007 due to the economic downturn. The industry is severely affected by the downturn in the US economy and emission related issues. But the manufacturers expect demand to pick up in 2009 onwards as the new emission regulations will come into force in 2010.

But for someone like me who is crazy about trucks, the show was a mind blowing experience. In fact, in India we don’t get to write much about the US truck manufacturers. The commercial vehicle industry in India is more influenced by European CV manufacturers like Volvo, MAN, Scania, Mercedes, etc. We have very limited influence from the American truck brands. The only major JV is between International and Mahindra for commercial vehicles which will launch the new generation products in 2009.

There are many leading American truck manufacturers like International, Kenworth, Peterbuilt, Freightliner Western Star and Mack. Ofcourse most of these brands have been acquired by European truck manufacturers. Freightliner and Western Star are owned by Daimler, Mack by Volvo and Kenworth by the Paccar Group. Although these brands have been acquired by European manufacturers they have managed to retain the identity of the classic America Trucks they are known for.

The American trucks are in a league of its own. Huge front face and cabins given these trucks a very distinct bold identity which is very American. These trucks are delight to watch.

The only time I remember watching these trucks was in Arnold's Terminator movie when a huge truck in the climax. In fact, I literally felt like a child dropped in a candy box. I just went crazy over these trucks. The star of the show or can I say in true American style, the Big Daddy of trucks, was the all new Lonestar from International. This truck just blew my mind off. Maintaining the classic American style, the truck has stunning bold looks. In fact I felt like giving up my job and become a truck driver. The Lonestar was unveiled at the MATS by Mr. Deep Kapur, President of Navistar Corporation. Incidentally, Mr. Deep Kapur was responsible for the Mahindra - International joint venture.

I don’t think we will ever get to see these trucks on Indian roads. But these are truckers delight. In fact, majority of the truck operators in the US are Owner Operators. They literally live out of their trucks and cover really long distances on their trucks. Hence most of the trucks come with huge driver cabins which make for both work and sleep. The US sells close to 400,000 of the class 8 heavy duty trucks every year. Class 8 trucks are 500 hp and above. This makes US the world's single largest market for heavy trucks. But it has not been all that good for the truck industry. 2007 saw the industry drop by more than 40 per cent in absolute volumes and the trend seems to continue during the current year too.

The industry is severely affected by the downturn in the US economy and emission related issues. But the manufacturers expect demand to pick up in 2009 onwards as the new emission regulations will come into force in 2010.