Published on February 20, 2014
Strategic Analysis of Engine Downsizing Trends of North American Heavy-duty Truck Manufacturers A 2% to 3% Reduction in Class 8 Truck Engine Displacement Expected by 2018 NAAF–18 December 2012
Research Team Lead Analyst Contributing Analyst Ananth Srinivasan Bharani C. L. Senior Research Analyst Automotive & Transportation Industry Analyst Automotive & Transportation (91.44) 6681.4125 (91.44) 6681.4121 email@example.com firstname.lastname@example.org Research Director Strategic Review Committee Leader Sandeep Kar Sarwant Singh Research Director–Commercial Vehicles Automotive & Transportation Partner Automotive & Transportation (1) 416.490.7796 (44) 207.915.7843 email@example.com firstname.lastname@example.org NAAF–18 2
Table of Contents Section Slide Number Executive Summary 4 Research Objective, Scope, Methodology, and Background 17 Definitions and Segmentation 24 Mega Trends and Industry Convergence Implications 30 Market Dynamics and Impact on Powertrain Technologies—North America 35 HD Engine Downsizing in North America—Overview 49 Engine Downsizing Strategies—North America OEMs 64 Conclusions and Strategic Recommendations 89 Appendix 94 SuperTruck Program—Key Insights 95 NAAF–18 3
Executive Summary NAAF–18 4
Powertrain Downsizing—Key Findings Heavy-duty Engine Market: Key Takeaways in North America, 2012 • Weighted average engine displacement is expected to shift from 13.7 to 14.1 liters (L) in 2011 to 13.4 to 13.7 L by 2018, amounting to 2 to 3 percent downsizing. A corresponding shift in power density is expected to be at 6 to 8 percent, increasing from the current level of 36.6 bhp/L to 38.9 bhp/L. Technology advancements are enabling 11 L engines to deliver 380 to 420 horsepower (HP). • Key market drivers include changes in freight movement patterns, increasing urbanization, and penetration of natural gas and hybrid commercial vehicles. A strong used truck market and possible introduction of mega-trucks in the long term are expected to be the two major market restraints. 1 2 • • 3 • • 4 • Engine downsizing is expected to be higher in the vocational and regional/local haul segments when compared to the line-haul segment. The share of larger engines in the line-haul segment is expected to decrease as a result of the “trucks cubing out before weighing out” trend. All heavy-duty original equipment manufacturers (OEMs) interviewed have shown varying degrees of preference for downsizing, OEMs’ activities are expected to show results from 2014 onwards and will be driven by continued fuel price volatility and rising adoption of CNG/LNG and hybrid heavy-duty trucks. This rising preference for downsizing is indicative of an “OEM push” rather than a “market pull” in the North American heavy-duty engine market. Source: Frost & Sullivan analysis. NAAF–18 5
Powertrain Downsizing—Big 5 Predictions Engine downsizing is gaining preference in the North American heavy-duty (HD) truck industry. In conjunction with other advanced technologies, this is expected to drive reduction of fuel consumption and 1 emission by at least 20 percent by 2018. This is also expected to provide flexibility in engine right-sizing for major HD OEMs, which are increasingly adopting platform-based truck production. Weighted average reduction in engine displacement is estimated through OEM/vocation-based analysis to be between two to three percent for the industry. In 2011, the weighted average displacement was 13.7 to 2 14.1 L, which by 2018 is expected to shift to 13.4 to 13.7 L. Power output for the same period is expected to increase from the current 400 to 520 HP to 425 to 540 HP range. Dominance of 15 L engines is expected to continue in the Class 8 long haul segment, although its share within the long haul segment will decline. Driven by factors such as the downsizing of activities of OEMs, 3 growth in the regional/urban haul segment, Cummins Inc.’s larger role in the 12 to 14 L range, vertical integration within the industry, and regulatory pressures, the installation of 12 to 14 L engines is expected to increase and come on par with 14 to 15 L engines by 2018. Daimler trucks and Volvo trucks are two participants expected to be the strongest proponents of downsizing in the forecasted period. Navistar Inc. will pursue increased downsizing activities post 2015, 4 owing to its recently adopted SCR-based emission reduction strategy. Cummins Inc. is expected to increase downsizing activities gradually from 2013 until 2018. Key factors such as the rising proliferation of CNG/LNG trucks; the rising utilization of technologies such as downspeeding, advanced turbocharging, waste heat recovery, and in-cylinder improvements; and the 5 rising proliferation of semi-automatic transmissions are expected to bridge the demand-supply gap for downsized engines. Source: Frost & Sullivan analysis. NAAF–18 6
Advanced Powertrain Technologies—Comparative Outlook In-cylinder Improvements and WHR Emerge as Best-Fit Technologies at Present; Downsizing, Downspeeding, and Turbo Technologies Expected to Gain Preference by 2018 Technology Description Level of Industry Interest Dependency Rating Expected EndUser Benefit Advanced in-cylinder improvements Key OEMs Cummins, Daimler, Navistar Volvo, Daimler Downsizing Downspeeding Daimler, Navistar, Paccar, Volvo Hybridization Daimler, Navistar, Paccar, Volvo Daimler, Volvo, Navistar, Cummins WHR Turbochargers and boosting technologies Daimler, Navistar, Paccar, Volvo, Cummins Advanced aftertreatment Daimler, Navistar, Paccar, Volvo Daimler, Volvo Engine prognostics LEGEND NAAF–18 High Medium-High Medium Low Note:1. All ratings are qualitative. 2. Ratings are a combination of F&S analysis and market research. Source: Frost & Sullivan analysis. 7
Advanced Powertrain Technologies—Benefit versus Barriers High Future Truck Powertrain Will Leverage Multiple Solutions for Fuel Efficiency Enhancement; Downsizing Emerging as a Key Ingredient of an Integrated Solution • Least preferred zone 4 • Technology Barriers 6 2 8 3 • 7 • 5 Medium • Most preferred zone High Legend: 1—advanced in-cylinder improvements; 2— downsizing; 3—downspeeding; 4—hybridization; 5—WHR; 6—turbochargers and boosting technologies; 7—advanced after-treatment; 8—engine prognostics NAAF–18 Downspeeding is emerging as a major focal point for OEMs to enhance fuel efficiency, sometimes in conjunction with and also independent of downsizing. Convergence of OEM capabilities and enduser preferences 1 Medium Benefit to Industry Highly inter-dependent technologies with high-end user/industry benefits Driven by regulation, after-treatment and downsizing technologies require high capital investment from the OEMs to accomplish desired levels of benefit. Expected to continue being key ingredients of the longterm strategy of all HD OEMs • • Independent engine technologies capable of delivering significant improvements in engine/vehicle efficiency Key focus area for all HD OEMs Technological advancements in these areas are easily deployed across product ranges, thereby improving their RoI ratio. Note: Representation is only for indicative purposes. Mapping is based on primary and secondary research. Source: Frost & Sullivan analysis. 8
Advanced Powertrain Technologies—Weighted Average Preference Ranking OEMs’ Preference Ratings for Various Technologies Reveal Downspeeding, Waste Heat Recovery, and Advanced After-treatment as Top Three Most Focused Technologies Heavy-duty Truck Engine Market: Weighted Average Preference Ranking of Advanced Powertrain Technologies by Key OEMs, North America, 2011 In-cylinder improvements • 7.9 Engine prognostics Downsizing 7.8 7.5 • • Advanced aftertreatment 8.1 8.4 Downspeeding emerges as top preference across all OEMs. WHR is critical due to significant benefits the technology offers. All OEMs are expected to focus on aftertreatment technologies, owing to regulatory mandates. Downspeeding Turbochargers and related boosting technologies 7.6 7.9 8.2 Hybridization Note: 1. Ranking is on a scale of 1 to 10, with 10 being most preferred, and 1 being least preferred. 2. Weighted average ranking used as representative of industry. Individual OEM level rankings are detailed in respective OEM profiles. Waste heat recovery Source: Frost & Sullivan analysis. NAAF–18 9
Heavy-duty Powertrain Configuration—Future Blueprint Three Percent Reduction in Engine Size Driven by 5 Percent Improvement in Power Density Will Usher Right Sizing of Engines in North American Class 8 Trucks Parameter Baseline specification*(2011) Expected future specification* (2018) Key Insights* Engine displacement 13.7 L–14.1 L 13.4 L–13.7 L 2 to 3 percent reduction High-end Engine Power 400–520 bhp 425–540 bhp 4 to 6 percent increase Engine torque 1250–1650 lb. ft. 1300–1750 lb. ft. In-line 6 cylinder In-line 6 cylinder Predominantly VGT Predominantly VGT 4 to 6 percent increase Cylinder de-activation being tested for mid- to long-term implementation Electric turbo-compounding expected by 2018 Configuration Turbo technology Transmission • • Brake thermal efficiency Predominantly • manual Large proportion of • third party transmission offering 42 percent Rising penetration of AMT OEM proprietary transmission as standard Increasing market trends toward optimized proprietary enginetransmission-axle offering 50 percent or above SuperTruck program expected to be a major step toward BTE improvement * Note: All data is proprietary F&S estimates. Weighted average numbers are used, and serve only as representatives of downsizing and related activities in the industry. Source: Frost & Sullivan analysis. NAAF–18 10
Analysis of Key Design Parameter Ranges for HD Engine Market, 2011–2018 Powertrain Downsizing Pushing Weighted Average Engine Displacement to Under 14 L in Class 8 Trucks by 2018 Heavy-duty Truck Engine Market: Diesel Engine Market Overview, North America, 2011 Displacement (in L) 9 10 Torque (in lb. ft.) Power (in bhp) 11 12 13 14 15 Median range 16 2011 13.7 L–14.1 L 2%–3% reduction 2018 9 10 11 12 13 14 15 16 300 350 400 450 500 550 600 650 2011 13.4 L–13.7 L 400–520 bhp 4%–6% increase 2018 300 350 400 450 1100 1250 1400 1550 500 550 600 650 1700 1850 2000 2150 2011 425–540 bhp 1250–1650 lb. ft. 4%–6% increase 2018 1100 1250 1400 1550 1700 1850 2000 2150 1300–1750 lb. ft. Source: Frost & Sullivan analysis. NAAF–18 11
Voice of Customer Research (Next Five Years) In 2012, 1 in 5 Fleet Managers of Top-100 Class 6–8 Truck Fleets in the United States Anticipate Spec’ing Downsized Engines; In spite of Being a Small Fraction, This Shows a Noticeable Market Trend Heavy-duty Truck Engine Market: Fleet Vehicle Purchase Intentions, United States, 2012 Trucks in the same vehicle weight class with similarly sized (displacement) engines Trucks in the same vehicle weight class with smaller displacement engines 20% Smaller trucks with smaller displacement engines 45% 0% 93% 29% 14% 91% 19% 1% On Highway 3% 0% 86% Vocational 91% Percentage of each choosing only this response 20% 40% 60% 80% 100% Base: All 2012 respondents (n=100). Q34. Thinking about your fleet's vehicle purchases in the next five years, please select all of those which you Note: Data sourced from Frost & Sullivan Customer Research anticipate buying. (Multiple response) 2012. NAAF–18 Source: Frost & Sullivan analysis. 12
Case Study—Cascadia Evolution Significant Improvements Without the Need for Downsizing, Indicating Further Improvement Potential If and When Downsizing is Introduced System Engine Transmission Axles Description Detroit DD15 ( 100 lbs. lighter than previous DD15 engine) DT12 AMT Detroit drive axles • Aerodynamics • • Key Improvements • • • • • • Cascadia Evolution shows the success of Daimler’s vertical integration strategy GHG 2014 norms compliant Asymmetric turbocharger Next-generation amplified common rail system Single filter system (which is expected to double the change interval to 100,000 miles) Proprietary transmission based on second generation AMT in Daimler E.U. trucks Two pedal AMT, featuring pneumatic clutch and shift actuator Improved frontal area aerodynamics, including new air dam, hood-to-bumper fill Integrated antenna, elliptical shaped mirrors Chassis side fairings, and 20-inch side extenders Using Evolution as a base and downsizing as a strategy, Daimler can further enhance power density and fuelefficiency of its engines Source: Daimler, Frost & Sullivan analysis NAAF–18 13
Research Scope, Objectives, Background, and Methodology NAAF–18 14
Research Scope Base Year 2011 Study Period 2008 to 2018 Forecast Period 2012 to 2018 Vehicle Type Heavy-duty Commercial Vehicles Geographical Scope North AmericaUnited States, Canada Heavy-duty Truck Engine Market: Partial List of Forecast Database North America, 2011–2020 Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Class 8 truck production (in ‘000) 238.5 248.1 245 305.4 325.4 287.2 299 318 327.9 340.1 Source: Frost & Sullivan analysis. NAAF–18 15
Research Aims and Objectives Aims To understand and analyze the extent of engine downsizing that will shape engine design in North American heavy-duty trucks Objective To understand the macro-trends necessitating fuel efficiency improvements and emission reductions. To outline market drivers and restraints, industry challenges in downsizing, and their key benefits Compare and analyze the powertrain downsizing strategies of major HD OEMs in North America Predict technology and market trends that will shape downsizing and will be shaped by downsizing with an aim to offer strategic insights to facilitate decision making Source: Frost & Sullivan analysis.. NAAF–18 16
Key Questions This Study Will Answer Heavy-duty Truck Engine Market: Key Questions This Study Will Answer, North America, 2011 How does powertrain downsizing fit into fuel efficiency improvement and emissions reduction? What are the key market and technology trends driving the powertrain downsizing scenario? What are the downsizing strategies of key heavy-duty OEMs in North America? How do OEMs compare, and what are the implications of the downsizing strategy adopted? How is the North American heavy-duty engine market expected to evolve, and what would be the best-fit engine specification for future heavy-duty trucks? Source: Frost & Sullivan analysis. NAAF–18 17
Research Methodology Research Methodology: Frost & Sullivan’s research services are based on secondary and primary research data. Secondary Research: Information is extracted from existing reports and project material within the Frost & Sullivan database, including data and information gathered form technical papers, specialized magazines, seminars, and Internet research. Primary Research: More than 15 interviews have been conducted over the phone by senior consultants/industry analysts with original equipment suppliers, regulation authorities, and distributors across the globe. Primary research has accounted for 80.0 percent of the total research. Heavy-duty Truck Engine Market: Partial List of Industry Participants, North America, 2011 OEM: North America Supplier: North America Supplier: North America Paccar Inc. Cummins Inc. Johnson Mathey Navistar Inc. MAHLE Powertrain Mack Trucks Eaton Corp. Daimler Trucks North America Allison Transmissions Volvo Trucks North America WABCO Source: Frost & Sullivan analysis. NAAF–18 18
Vehicle Segmentation Vehicle Classification Definition Gross Vehicle Weight Ratings (based on U.S. DOT Classification) Light Commercial Vehicles (LCV) LCVs represent vans and light trucks. The typical applications include pick-up and delivery, utilities, airport operations, facilities management, and several other vocational applications. Class 1, 2, and 3 GVWR <= 14000 lbs. Medium Commercial Vehicles (MCV) MCVs represent all types of mid-size trucks, vans, and buses. The typical application includes home delivery, logistics, parcel delivery, utilities, waste and recycle collection, airport operations, and small and medium school and transit buses. Heavy Commercial Vehicles (HCV) This includes all types of large trucks. The typical application includes line haul freight trucks, refuse trucks, mining and construction trucks, and other types of vocations that demand high GVWR trucks. Class 4, 5, and 6 GVWR >14000 & <=26000 lbs. Class 7 and 8 GVWR >26000 lbs. The scope of the study is the Class 8 heavy-duty truck engine market Source: US DOT, EPA, Frost & Sullivan analysis. NAAF–18 19
Key OEM Groups Compared OEM groups evaluated and compared in this study include the following: Group OEMs Cummins Inc. Cummins Inc. North America Daimler Group Daimler Trucks North America LLC Volvo Group Volvo Trucks North America, Mack Trucks North America PACCAR Inc. Peterbilt Truck Company, Kenworth Truck Company Navistar Inc. Navistar International North America Source: Frost & Sullivan analysis. NAAF–18 20
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Relevant Research This research is supplemented by our completed and ongoing work in the global truck market, which include the topics below: • • • • • • • • • • M657-18: Strategic Analysis of Global Low-cost Truck—Completed NA53-18: Strategic Analysis of Platform Strategies of Major Global Heavy-duty Truck OEMs—Completed N8CF-18: Strategic Analysis of Class 6‒8 Natural Gas Truck Market in North America—Completed NA5E-18: Strategic Analysis of the Global Bus Rapid Transit Systems Market—Completed NADC-18: Strategic Analysis of Chinese Hybrid and Electric Transit Bus Market—Completed M7BB-18: Strategic Analysis of Medium-Heavy Hybrid and Electric Truck and Bus Market in China and India—Completed N9FF-18: Strategic Analysis of Medium-Heavy Hybrid and Electric Truck and Bus Market in North and South America—Completed M783-18: Strategic Analysis of Medium-Heavy Hybrid and Electric Truck and Bus Market in Europe, Middle East and Africa—Completed N818-18: Strategic Analysis of Growth Opportunities in Global Commercial Truck Industry 2010‒2020— Completed N8AA-18: Strategic Outlook of the Western European and North American Medium- and Heavy- Duty Commercial Vehicle Transmissions Original Equipment Market Source: Frost & Sullivan analysis. NAAF–18 22
Market Engineering Methodology One of Frost & Sullivan’s core deliverables is its Market Engineering studies. They are based on our proprietary Market Engineering Methodology. This approach, developed across the 50 years of experience assessing global markets, applies engineering rigor to the often nebulous art of market forecasting and interpretation. A detailed description of the methodology can be found here. Source: Frost & Sullivan research NAAF–18 23
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