commercial vehicles

There will be no room for complacencyamongst truck manufacturers who

succeed in meeting Euro 5 emissionstandards due in 2008, according to DrPaul Greening of the EuropeanCommission. Speaking at an internationalconference on ‘Health Effects of VehicleEmissions’ in Birmingham, UK, Greeningsaid the EC was committed, before the endof 2002, to review and then either confirmor modify the Euro 5 proposals and 2008implementation date announced two yearsago. The proposed 2g/kWh NOx and0.02g/kWh particulate limits would be thefocus of attention in the review, thoughwhat Greening called ‘other projects’would be debated at the same time. Thosewere likely to include the issue of whethertechnology at the end of the presentdecade could achieve even lower limitsand whether in future it might be practicalto incorporate Euro 6 requirements, a

standard for exhaust particle size and/ornumber as well as mass.

Greening commented that even basedon the most optimistic technology, achiev-ing Euro 5 truck and bus diesel limitcompliance would need exhaust after-treatment to reduce both NOx and PM. Healso warned that every form of deNOxcatalyst system and particulate filterrequired ‘zero sulphur’ – in fact 10 parts-per-million or less – fuel, adding that on-board diagnostics (OBD) would play anessential part in enforcing ‘in use’ emis-sions legislation from Euro 4 onwards. Onthe heaviest long-haul trucks, Brusselswas expecting catalyst systems and sootfilters to maintain their performance,under OBD monitoring, for 500,000km,or seven years, he said.

According to Greening, one ofthe biggest OBD challenges for vehiclemanufacturers is to get NOx and PM

In this issue

M O N T H LY A N A LY S I S O F D E V E L O P M E N T S I N G L O B A L T R U C K , B U S A N D A S S O C I AT E D I N D U S T R I E S

January/February 2002 • Volume 3 • Issue 7

Euro 5 ‘not the end of the road’on emissions, warns Brussels

WORLDCommercial Vehicles

Remaining Mercedes-Catcollaboration ‘close to collapse’DaimlerChrysler’s diesel fuel system

joint venture with Caterpillar isthought to be close to collapse. LastAugust the two companies shelved theaccompanying November 2000agreement on mid-range enginedevelopment, which would have seenCat’s all-new 9-litre diesel filling the biggap in Mercedes’ current truck enginerange. Industry sources now say Cat’s

accumulator-type HEUI injection systemhas not come up to DaimlerChrysler’sexpectations, especially on fuel economyunder Euro 4 and 5 emission lawcompliance conditions. Caterpillar is alsounderstood to be under continuingpressure from Paccar, its biggest truckengine customer, to abandon anycollaboration with DC, the parent of itsmain competitor Freightliner.

InterviewStefano Chemielewski, Vice PresidentMarketing, Renault VI. . . . . . . . . . . . . . . 3

Shock as second Volvotop executive quits . . . . . . . . . . . . . . . . . 5

DaimlerChrysler wants profitability,not market share . . . . . . . . . . . . . . . . . . 5

Liaz Sipox buys Skoda truck plant . . . . . 7

Iveco builds first TurboDailyin Zaporozhye. . . . . . . . . . . . . . . . . . . . . 7

Karosa sales up, earnings down . . . . . . 8

FAP seeks a partner . . . . . . . . . . . . . . . . 8

Hyundai to begin truck sales in US . . . . 9

Iveco to transfer Argentineoperations to Brazil . . . . . . . . . . . . . . . 10

Nissan Diesel dissolves Philippinebus venture . . . . . . . . . . . . . . . . . . . . . 11

Scania invests in South Korea . . . . . . . 12

Westport and Isuzu cooperateon dual-fuel diesel unit . . . . . . . . . . . . . 15

GM drops out of UK pick-up market . . 17

Data analysis . . . . . . . . . . . . . . . . . 19-23

Continued on page 3

By Alan Bunting

World Commercial Vehicles

EVENTS2

January/February 2002

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Amsterdam 2002, The European Road Transport ShowFebruary 7-16, 2002 Amsterdam, Netherlands http://www.bedrijfsautorai.nl/nl/homepage/default.asp -

Tire Technology Expo 2002February 20-22, 2002 Hamburg, Germany http://www.testing-expo.com/tire/expo/2002index.html +44 1306 743744

National Truck Association Convention & ExhibitionMarch 5-8, 2002 Orlando, USA http://www.ntea.com -

Busworld ShanghaiMarch 20-22, 2002 Shanghai, China [email protected] +32 51 22 60 60

Mid-America Trucking ShowMarch 21-23, 2002 Louisville, USA http://www.truckingshow.com -

Commercial Vehicle ShowApril 30-May 2, 2002 Birmingham, UK http: //www.cvshow.com +44 7 235 7000

South African Truck ExhibitionMay 29-31, 2002 Durban, South Africa http://www.tmlreed.co.za -

Suissetransport 2002June 4-8, 2002 BEA Show Centre, Berne, Switzerland [email protected] 41 22 761 11 11

International Trucking ShowJune 27-29, 2002 Las Vegas, USA http://www.truckshow.com -

Hanover Commercial Vehicle Motor ShowSeptember 12-19 Hanover, Germany http://www.iaa.de -

World Congress on Intelligent Transport SystemsOctober 14-18, 2002 Chicago, USA http://www.itsa.org/worldcongress.html +61 2 9241 1478

Tokyo Commercial Vehicles ShowOctober 29-November 3, 2002 Tokyo, Japan http://www.motorshow.or.jp/eng/index.html -

SAE International Truck and Bus Meeting and ExhibitionNovember 18-20, 2002 Cobo Center, Detroit, USA http://www.sae.org/truck -

Commercial Vehicle Events • February 2002–November 2002

Renault VI has made some headwayin growing its market share in some

European markets. Whilst it stilldominates the French market (37percent), it also has 20 percent of theIberian Peninsula market, and a growingshare in the UK and Italy. These shares,according to Chemielewski, have beenreached by a delicate balance of volumeverses bottom line, although he didadmit, “every now and then you have tofill in with volumes.”

Nevertheless, the road to the top slotcontinues to be somewhat rocky. “Thereis a pendulum effect between theIveco/Pegaso Group and Renault VI inIberia. Sometimes we manage to reachtarget sales whilst maintaining an over-all dominance, sometimes it falls to theIveco Group.”

As someone who is responsible forall marketing and sales operations,Chemielewski recognises the vast differ-ences between the EU’s markets. “Thewords European harmonisation makeme laugh” he says.

For example, “Benelux operators bydefinition are masters of internationaltraffic with 40 tonners. TheScandinavians on the other hand have awealth of experience running at weightsup to 60 tonnes with roadtrains.”Chemielewski wonders whether EUmember states are thinking straight

when they talk about conformity, espe-cially given such deep-rooted diversity.“The Nordic nations would love to run60 tonners across the highways andbyways of Europe like some kind ofAustralian model; in reality this is just awild dream.”

If indeed it ever comes,Chemielewski thinks operationalharmonisation is bound to favour thetransport industry: “At the very least astandard plan is required for the future.”Having said all that, Chemielewski cansee some areas where certain countriescould learn from others. “In Italy forexample there is huge tendency to oper-

ate more rigid vehicles than full weightartics; but in the UK it is the other wayround. With more and more restrictionsbeing placed on already congestedcities, smaller vehicles may be the wayforward over larger full weight trucks. Ithink the UK could, in time, be a coun-try more suited to smaller trucks.”

On price harmonisationChemielewski said, “Renault VI doesnot charge different prices for truckssold in different countries. The largestvariations occur after the chassis leavethe plant (i.e. taxation, individualmarket profits, etc.), and we are one ofthe only manufacturers, which has aprice list for all dealers, no matter thelocation.” He added that in addition totaxes, each market has an individualspecification. “We must cope withdifferent regulations in certain marketsand this one area which pushes up chas-sis prices after or before they leave ourfactories.”

How does Renault decide targets foreach market? “We decide at the start ofeach year how many vehicles we plan tosell in each country; that figure is thenset in stone (although it could bechanged after a lengthy negotiationprocess). The marketing team atRenault VI then look at the previousyears’ sales figures and a plethora ofregional forecasts.”


Renault VI • Euro 5

WESTERN EUROPE / NEWS 3


measuring sensors that are both accurate and durable in allclimates. Partly because of sensor accuracy uncertainties,Greening said the Commission is seeking a Euro 4 NOx alertsetting of 7g/kWh, even though the legislated limit was only3.5g/kWh. Similarly, the PM threshold is due to be set at

0.1g/kWh, he said. In other words, a ‘polluting exhaust’ dash-board warning to the driver or fleet engineer would not betriggered until engine wear and tear or malfunction, or after-treatment deterioration, had pushed the sensor-measured NOxemission level to twice – or the PM level to about four times -the legislated limit.

Euro 5 continued from page 1

Interview with Stefano Chemielewski, Vice President, Renault VI

Stefano Chemielewski is Vice President of Renault VI’s buoyant Marketing Operations. WCV exclusively

interviewed the ex Volkswagen and Iveco Group executive on a number of subjects, including the company’s

marketing policy

Stefano Chemielewski is Vice President of RenaultVI’s buoyant Marketing Operations

Chemielewski says obtaining marketspecific information is sometimes anunenviable task, especially in certaincountries. In France for example youcan access market figures every 15 days,whereas Italy tends to publish every fourto seven months. “In the case of thelatter we are working some monthsbehind,” he pointed out.

So how does the company monitor anentire market? “In principle we monitoreverything monthly using several indi-

cators. One of them is housing and theuse of construction material output,items such as plumbing materials, insu-lation and bricks added to the obviousindicators such as industrial and tradeassociations, consumer confidencesurveys, etc.”

But are the indicators ever wrong? “Ofcourse. All the indicators at the momentshow Europe is slowing down, which itclearly is not, or not as fast as the punditsreckon anyway. I recently spoke to an

Italian businessman who owns privatemotorway networks and tunnels. His lastset of figures show an increase of sevenpercent, yet everybody is still expecting adramatic downturn.” With a set of figuresin hand, how accurate are they? “Over amonth or so, not very. Yet over longerperiods, say six months, they can beamazingly close to the truth.”

With targets negotiated at the begin-ning of every year, Renault knows eachmarket will try to negotiate a lowertarget figure. On the other hand, themanufacturer wants to bolster profitablemarket share whilst keeping the othereye on factory output. “This is wheretarget assessment becomes a sort ofbalancing act,” says Chemielewski.“Companies such as ours can win orlose percentage points on their ability toadapt and negotiate in relation to plantcapacity output.”

With factory manning and supplylevels all part of this particularheadache, Chemielewski says truckbuilders will sometimes shift vehiclesfrom one market to another, which againhas its own problems. “In the UK wehave to watch for market changes muchsooner than the rest of Europe becauseof the right hand drive problem. Wecould not for instance move a few vehi-cles up from Spain as a short-term solu-tion to shortages. This leaves us with nooption but to create a specific inventoryfor the UK and the rest of our right handdrive markets.”

Chemielewski is considering entry tosome new emerging markets and identi-fies an opportunity for RVI product inSouth America. “With the width restric-tions in place in cities such as SaoPaolo, Mascott could be the answer tothe downtown. Midlum could alsocompete very well with other models inBrazil, although we would need totackle the local content criteria.”


Renault VI

WESTERN EUROPE4


Renault VI president cautiously optimistic about 2002

“We expect the truck market in Europe to decline by about 10 percent next year, but our

sales will not fall to the same degree,” said Philippe Mellier, head of Volvo Global

Trucks’ Renault VI division. He added that his company has no plans to counteract the market

decline by cutting prices: “lower volumes do not necessarily mean that we earn less. In fact we

have put up our prices three times this year.”

The main reason why Renault expects to do better than its competitors and VGT parent group as

a whole is its broad product mix of light, medium and heavy trucks. “The light-duty segment is

not going to decline as much as the heavy-duty one next year,” predicted Mellier. Industry

analysts also point out that under VGT restructuring Renault sales performance no longer

includes Mack, whose domestic North American market remains in the doldrums.

Mellier added that some 45 percent of Renault VI sales are in France, where the truck market has

declined less than in Germany for example, where major competitors Mercedes and MAN have

been hit by a near 20 percent drop in sales.

• Renault VI has said it will cut its truck production in January by 10 percent from 195 to 175

units per day in response to falling demand. The company is also expected to shed some of its

temporary workforce at its French plants. Temporary workers currently account for around 10

percent of its entire French workforce.

Renault must raise its quality standards, says Volvo’s Halonen

Volvo Truck Corporation CEO Jorma Halonen has said strategic planning by parent Volvo

Global Trucks on integration of the Volvo, Renault and Mack ranges by reducing the number

of platforms from ten to three will involve significant problems. Not least is the question of vary-

ing quality standards. In an interview with the Swedish magazine Vehicle Component, Halonen

pointed out that Volvo had for some time demanded from its suppliers the international QS9000

quality standard (initially set up by the ‘Big Three’, based on the European-initiated ISO9000

standard), but neither Renault VI nor Mack imposed such a requirement. He added that by the

time they had QS9000 in place, Volvo might well have raised the quality stakes higher, through

adoption of the more exacting TS16949 industry standard.

Exploiting synergies between the three marques would be difficult, said Halonen,without

common quality targets, adding that Renault and Mack “will have to move up to our level’. He

said major decisions on product rationalisation across the VGT group had to be made next

Spring and unless harmonised quality standards could be set across the group, those decisions

were likely to be made with little or no Renault or Mack participation. Halonen added that he was

keenly ‘aware that not all mergers for economy of scale turn out well”.

All the indicators at the moment show

Europe is slowing down, which it

clearly is not


Volvo • DaimlerChrysler • MAN

WESTERN EUROPE5


Shock as second Volvotop executive quits

Only three months after being appointed, Volvo TruckCorporation vice-president and head of European sales

Torbjoern Browall has resigned. He told the Swedishf inancial newspaper Dagens Industri that he wascontractually bound not to speak publicly about the reasonsfor his defection, but insiders say he was, and remains, verycritical of the drastic restructuring of VTC’s European salesand distribution network implemented by Nils Arthur, hispredecessor. Having reportedly ‘stepped on too manysensitive toes’, Arthur also left Volvo abruptly (WCVOctober), leading to Browall being head-hunted from SAPA,a Swedish aluminium supplier.

Arthur’s cost-driven reorganisation of the importernetwork across Europe led to the announcement of 200 joblosses, including 40 in the UK, most of them at VolvoTruck & Bus headquarters at Warwick. Browall is under-stood to have wanted the scale of the restructuring reduced,but at a time when Volvo is facing huge problems else-where in the world, notably in North America, the corpora-tion’s new CEO Jorma Halonen is thought to be adopting ahard line.

DC now wants profitability,not market share

DaimlerChrysler’s commercial vehicle arm plans to reverseits strategic priorities by putting profit above market

share. The turnaround was outlined by Eckhard Cordes,DaimlerChrysler’s management-board member withresponsibility for commercial vehicles, in an interview withHandelsblatt. Cordes said the new strategy would meanproducing fewer trucks and increasing prices and wouldapply in particular to the Freightliner US subsidiary. Headded that savings alone would not be enough to solve theproblems of over-capacity and falling prices, saying, “Allproducers have to rethink their strategy.”

Cordes told Handelsblatt that he expects demand fortrucks to continue falling in 2002, with European salesfalling at a stronger rate than previously expected. “We arenow expecting a downturn of at least 15 percent, possiblyeven more,” he said.

Stowaway fines judged illegal

The UK High Court has ruled that the government’s policyof f ining truck operator’s £2,000 for every stowaway

found onboard a truck is illegal. The policy brought cross-channel rail freight to a virtual standstill amid argumentsabout who should be responsible for security at the ChannelTunnel terminal in France.

DC slashes truck output at Wörth

DaimlerChrysler plans to cut output at its Wörth truck plantnear Karlsruhe from the beginning of 2002. A spokesman

for the company said the plant would close for six days inJanuary and February due to falling demand, resulting in

several four-day weeks but nolayoffs. He added that thetemporary closures would allowthe plant to produce 330 trucksper day when open but wouldn’tcomment on whether the plant’splanned output for 2002 would be

reduced. However, when confirming the temporary shutdownsfor the beginning of the year, a representative of the workers’council told Reuters that planned production at the plant for2002 had been revised downwards from 78,300 to 66,300units.

Meanwhile, the 200,000th truck from the Actros rangerolled off the production line at Wörth in November. Actroswas initially launched in Europe in autumn 1996 and sincethen the main purchasers have been Germany (87,000),France (27,000) and Italy (15,000). The range is now sold in98 countries across all five continents and assembled as aCKD vehicle in Morocco, Iran, Tunisia, Egypt, Saudi Arabiaand South Africa.

MAN sets out its stall in Sweden

MAN has inaugurated a wholly owned importingcompany in Sweden. Though the German manufacturer

is already established in Norway and Denmark, thedomination of the two domestic truck builders has previouslydeterred active participation in the Swedish market. The newcompany, MAN Lastbilar & Bussar AB is based in Järfälla,near Stockholm.

Managing director is Axel Fischer, who says “MAN isnow filling the make’s last ‘white spot’ on the European salesmap,” adding that the aim was to create “a lean and efficient,customer-oriented organisation.” According to sales managerLars Jonason, the company is “aiming at some 5 percent ofthe Swedish truck market, mainly through the heavy MANTG-A range.”

Håkan Samuelsson, CEO of MAN Nutzfahrzeuge, who as aformer main board director of Scania, knows and understandsthe Swedish market well, says the new importing company willestablish direct sales teams in Stockholm, Göteborg andMalmö. These will gradually be complemented with contractdealers in the remaining areas. Seventeen independent serviceworkshops have been appointed to support Swedish buyers ofMAN chassis, as well as trans-European MAN operators fromother countries who require emergency field support.

In bus and coach activities MAN and its Neoplansubsidiary will be co-operating closely, making use ofNeoplan’s long-standing Swedish importer organisation.

Planned production at the

plant for 2002 had been

revised downwards from

78,300 to 66,300 units


Scania • Mercedes-Benz • MAN

WESTERN EUROPE6


Manufacturers fight for MoD order

The UK Ministry of Defence looks set to place an order in2002 for up to 10,000 all wheel drive 6-, 9- and 15-tonne

military trucks. Although the supplier of these trucks hasnot yet been decided, the main contenders include Paccar,DaimlerChrysler, David Brown, MAN/OAF, Oshkosh andVolvo. Two of these companies will make it through to thenext stage of the selection process in spring 2002, with thewinner due to be announced by the end of the year. Thiscompany will then be expected to supply the trucks from2004/5. The deal will also include 20 years of servicesupport.

Dutch military tests Scania trucks

The Dutch defence authorities took delivery of two Scaniatest vehicles at the beginning of December for a 12-month

evaluation period as part of negotiations concerning thesupply of up to 1,500 four-axle all-wheel-drive trucks. Bothtest vehicles use Scania’s 8x8 chassis, which was unveiled in2000 at EuroSatory, the European military equipment showin Paris. If successful in its bid, Scania will supply at least375 mine and ballistic-protected vehicle cabs, a product itdeveloped jointly with the Swedish Defence MatérielAdministration and launched in 1999.

Mercedes-Benz orderedto recall Turkish buses

ATurkish judge has ordered the recall of a significantnumber of Mercedes-Benz buses, citing evidence of a

design fault he said had led to the deaths of 49 people in anaccident around four years ago. The buses in question,

Mercedes-Benz Turk 0403models produced between 1995and 1998, were recalled withimmediate effect and must bemodified in accordance with theresults of an off icial report.However, in a statement sent toReuters, Mercedes-Benz Turksaid the recall was merely anattempt at discrediting thecompany. It added that suchaction would not only harm

Mercedes-Benz, but would also discourage foreigninvestment and thus prove harmful to the Turkish economyas a whole.

Mercedes-Benz Turk operates three factories and isresponsible for 67 percent of Turkey’s bus output. In the firstten months of 2001 it produced 1,389 buses, according to theTurkish Automotive Manufacturers Association.

MAN agrees to fewerjob cuts at Salzgitter

MAN has agreed a deal with unions at its Salzgitterplant in Germany that will result in fewer job cuts

than were previously announced as part of an overall planto cut 4,400 jobs to reduce costs. The company will nowcut 585 jobs at the plant rather than the originally planned850. It will also arrange to re-train the laid-off workersfor other jobs, while remaining staff will work fewerhours.

Swiss truck and bus showmoves to the capital

Following the demise of the Geneva commercial vehicleshow, which ran for 30 years, the Orgexpo agency, has

announced that a new exhibition for the transport industry isto be held biennially at the BEA Show Centre in the Swisscapital Berne.

The first bus and truck event will be Suissetransport 2002,which will take place from June 4 until June 8. The event will

occupy more than 30,000m sq ofthe BEA venue.

Displays by all major vehicleand trailer builders will providewhat is effectively a preview ofthe huge IAA exhibition atHanover in September.

Hess of Solothurn, one of thefew remaining Swiss busbuilders, will take the opportunityto exhibit the first of a new gener-

ation of Scania L 94-based 12m and articulated buses using anew concept of aluminium lightweight construction. Buses ofthis design have already been ordered by two Swiss urbantransport companies at Baden-Wettingen and Aarau. Thevehicles will have a similar configuration to those recentlysupplied by Hess in conjunction with Scania, to Tallinn inEstonia, where drawbar trailer use is an unusual feature ofpeak hour operation.

Bus & Bus Business fair, Verona

Around 11,000 people attended the 8th Bus & BusBusiness fair held in Fiera di Verona, I taly in

November, despite competition from the Busworld show inBelgium. Highlights of the event included the off icialannouncement of the deal between Carrozzeria Autodromoand Volvo Bus Corporation to make buses under 10.5 m forsale in Europe and the launch of the long-awaited IvecoDaily minibus.

Mercedes-Benz Turk said

the recall was merely an

attempt at discrediting...

and would not only harm

Mercedes-Benz, but

would also discourage

foreign investment

Displays by all major

vehicle and trailer

builders will provide what

is effectively a preview of

the huge IAA exhibition at

Hanover in September


Liaz • Iveco • GAZ • KamAZ

EASTERN EUROPE7


Liaz Sipox buys Skoda truck plant

The Slovak shareholding society Liaz Sipox has boughtthe Skoda Mnichovo Hradist company, the one-time

Czech Liaz truck manufacturer, for 50 million korunas(US$1.35m). The new owner received movables andimmovables worth 75 million korunas (US$2m), all plants,274 workers and stocks.

Liaz Sipox represents the joint company of Skoda a.s.Plzen (bankrupt) and Luxor Press, which belongs to thefinancially powerful group Sipox. According to the directorof the company, Rudolf Jakubik, its chief intention is torestore the production of the Skoda Liaz truck brand atMnichovo Hradist. “According to the information we havereceived, optimal production at the plant is at least 300 vehi-cles annually”, said Jakubik. He added that Liaz Sipox hadalready struck concrete deals on the delivery of commercialvehicles of this brand.

In the mid-1980s, Liaz manufactured 18,000 trucks annu-ally, and in 2000 as few as 180. The main reason for thecollapse of the giant is the loss of market, as major buyers ofits products in the communist era were Bulgaria, the USSRand China.

Iveco builds its firstTurboDaily in Zaporozhye

The Iveco-Motor Sich plant in Zaporozhye, Ukraineassembled its first TurboDaily at the end of November.

The plant will initially assemble small buses and vans with aplanned output of 203 vehicles a day. Annual ouput mighteventually be increased to around 8,000 vehicles per year.Production of EuroTech models with Cursor engines is also apossibility.

Belgrade buys 111 buses

At the beginning of December, the Belgrade city transportcompany invited a tender for the purchase of 74

articulated and 37 rigid buses. The purchase of 111 vehicleswill be funded by a €14m (US$12.5m) loan from the EBRD,which has also approved an additional €6m (US$3.35m) forthe reconstruction of the transport infrastructure used by theBelgrade city transport company.

The company applying for the supply of articulated busesis required to have an annual turnover of €30m (US$26.8m)or more, while the supplier of the other buses must have anannual turnover of at least €10m (US$8.9m). The bidder isalso required to have delivered at least 50 city buses to date.The closing date for the submission of tenders is January 21,2002.

GAZ’s taxi project

GAZ has started work on a major project to supply newvehicles to taxi companies across the Russian Federation

over the next three years. The first partner company is Moscow’s

Legavtotranslizing, which is funding the purchase of vehiclesfor Mosavtoleggtrans, an association which includes onethird of Moscow’s taxi parc. The first contingent comprises600 GAZelle’s, Sobol luxury micro-buses and Volga 3110vehicles.

The taxi service in Cheboksary (770 km south-east ofMoscow), which operates more than 100 vehicles, hasannounced it will restore the entire car stock for this purposethrough GAZ’s programme.GAZelle taxi

KamAZ to increase output in 2002

KamAZ plans to manufacture 24,000 trucks in 2002, anincrease of six percent on planned output for 2001.

Around 4,000 units of this output will be exported, thecompanys says. These targets are still subject to f inalconfirmation from the management.

The manufacture of LIAZ trucks has fallen from 18,000 in the mid-1980s to asfew as 180 in 2000

Russia’s first three-axlebus in serial production

Russia’s Volzhanin bus plant in Volzhsk, Volgograd district,has recieved an off icial approval to launch series

production of the first domestic city three-axle bus. The firstseries will include five buses, presented for the first time atthe motor show in Moscow in August 2001. Mounted on aself-propelled L941B6x2 Scania chassis, it is 14.95m long,2,47m wide, 3.15m high and can seat 44 passengers. The busis powered by a Scania six-cylinder in-line 310bhp engine.The construction, production and fitting of the body wasconducted at the Volzhanin plant.

At the same time, the plant is developing its own chassisfor a three-axle 15m bus. The bus would have a generating,front and third axle made by the Hungarian Raba plant.Engines would come from both domestic and foreign manu-facturers.

To date, Volzhanyn has manufactured more than 500city, suburban and inter-city buses intended for use innorthern and southern parts of the Russian Federation. “In2005, we expect to reach the full projected capacity for anannual output of 1,000 buses,” said director AnatolyBakulin.

Karosa sales up, earnings down

In the f irst ten months of 2001, the Czech Republic’slargest bus manufacturer, Karosa increased its sales by

seven percent to 1,038 vehicles, but turnover fell 3 percentto 3.7 billion korunas (US$100m) compared with thesame period last year. A spokesman for the company saidthat one of the reasons for this is the fact that moreinexpensive coaches were dominant in the sales structure.Due to the start of implementation of Euro 3 regulationson October 1, 2001, Karosa rescheduled the realisation ofmost of the orders for the last three months of the pastyear.

FAP seeks a partner

DaimlerChrysler and MAN have been short-listed as strategicpartners of Serbia’s only heavy truck producer, FAP, which

is currently facing financial collapse. The announcement cameafter a recent visit to Germany by Serbian government officialsand a team from the company itself. The Serbian governmentis to select the partner in the next few months, as FAP stillremains the property of the state. The company is currentlybeing restructured in order to prepare it for sale to a foreignpartner. Among other things, this implies the reduction of thenumber of employees from 3,000 to 1,500. The companyeventually aims to achieve annual production of 1,500 unitsby 2005, up from the current level of less than 200.

New YaMZ small engines

Russia’s largest diesel engine and gearbox plant, Avtodizel-YaMZ (Yaroslavsky motorny zavod - Yaroslav Engine

Factory) has started preparations for the production start-upof a new series of engines. The series consists of Euro 3 & 4compliant small diesel units with three, four and six cylindersand electronic fuel injection. The domestic market for thesetypes of engines, which are intended for light commercial andheavy passenger vehicles, is about 100,000 units per year, butthey are currently only available from foreign producers. Theproduction line for the engines will be installed at the existingYaMZ factory. Annual capacity will be 50,000 units withproduction scheduled for the end of 2003.

Around US$170m is expected to be invested in the projectby RusPromAvto holding (the owner of the control sharepackage in YamZ), the government of the Russian Federationand various other domestic and foreign creditors. The currentYaMZ 236 and 238 series V6 and V8 diesel engines willremain part of the programme for at least 15 years.


Volzhanin • Karosa • DaimlerChrysler • MAN • FAP • YaMZ

EASTERN EUROPE8


The first 3-axle bus from domestic production

FAP with MAN engine

NABI wins order for 113 buses

Hungarian bus manufacturer NABI has received an orderfor 113 low-floor buses worth more than US$33m from

PACE, a US public transport company based in Illinois. Thedelivery of the 35-LFW and 40-LFW model buses will takeplace during 2003. The contract also contains an option forPACE to order another 343 buses.

RuspromAvto buysmajority stake in Ural

RuspromAvto, a subsidiary of Russian Aluminium, hasacquired a 51 percent stake in the Ural Automobile Plant,

which was created in 2000 based on the bankrupt UralAZtruck manufacturer. A blocking 25 percent plus one sharestake in Ural will be transferred to the Sverdlovskgovernment. Ruspromavto also plans to buy back a 33.3percent stake in Iveco-UralAZ from gas giant Gazprom.UralAZ and Iveco each hold a 33.3 percent stake in the jointventure.

Nova Bus wins contractto supply 825 buses

Nova Bus, a Canadian joint venture between Volvo andHenlys based in Roswell, New Mexico, has won a

contract to supply 825 low-floor buses in a deal expected tobe worth between C$400m and C$700m. The purchaser isATUQ (Association du Transport Urbain du Québec), aconsortium of nine bus operators from Quebec, Canada,which operates over 3,000 vehicles. The buses will besupplied during a five-year period from 2003 to 2007. Thedeal also includes an option for the supply of another 250buses in 2008-2009 and an overall option of an additional 20percent increase on the supply volumes.

Volvo also announced structural changes in the Nova Busjoint venture, including the sale of the its Rapid TransitSystem (RTS) unit, which provides high-floor buses mainlyfor the US market. The company said demand for the high-floor concept has decreased significantly, leading to financiallosses. It added that if a buyer were not found, the operationwould be progressively phased out with a possible loss ofaround 400 jobs.

Hyundai to begintruck sales in the US

Hyundai Motor plans to commence sales in 2002 of 3.5-and 5-tonne trucks in the US. The Korean company

previously supplied trucks to US-based Bering on anOEM basis, but this agreement concluded last July whenBering was forced to terminate its operations due tofinancial shortages. However, Bering truck dealers, whoearlier distributed the Hyundai-built vehicles, will now begiven the opportunity to become Hyundai dealers. In aletter to all former Bering Truck dealers, Hyundai MotorCompany’s Senior Executive Vice President, Byung-KeeSmith said, “The move represents the creation of a newbusiness by Hyundai Motor in the United States andallows the diff iculties caused by the failure of BeringTrucks to be overcome.”

In a further bid to expand its presence in the US, Hyundaisaid it also plans to supply trucks using engines manufac-tured jointly with DaimlerChrysler, commencing in 2004.

MCI and Busscar to join forces

Motor Coach Industries International (MCI) and Brazilianbus manufacturer Busscar Onibus, are currently

negotiating the establishment of several joint initiatives,which focus on co-manufacturing, shared technology,branding, marketing and parts sourcing. Tom Sorrells, MCIpresident and chief operating officer said a co-operation

agreement with Busscar would“allow us to enter new markets,enhance technologies and expandour product offerings to betterserve our core North Americanmarket-place.” Edson Andrade,Busscar executive vice president,said, “In joining forces, we willeach gain strength and flexibilityin the global market-place.”

MCI is based in Schaumburg,Illinois. It builds coaches for

intercity, charter, tour, transit and conversion applications andoperates factories in Pembina, North Dakota; Winnipeg,Manitoba; and Sahagun, Mexico, as well as the Schaumburgheadquarters.

Busscar is a family-owned manufacturer based in SantaCatarina, Brazil, but with plants in Venezuela, Mexico,Norway, Cuba and Columbia. It produces its own busbodies, seats, air-conditioning, f ibreglass, windows andmultiplex systems and has a product line ranging from 12-passenger mini-coaches and low-floor shuttles to 50-foot,four axle, double-decker intercity coaches. Busscarproduced 5,458 units in 2000 and plans to make around6,000 units in 2001.


NABI • RuspromAvto • Nova Bus • Hyundai Motor • MCI • Busscar

NORTH AMERICA / SOUTH AMERICA9


E:mail the editor with comments and suggestions at

[email protected]

“This would allow us to

enter new markets,

enhance technologies

and expand our product

offerings to better serve

our core North American

market-place”


Scania • Marcopolo • Iveco

SOUTH AMERICA10


Scania Brazil raises prices

Scania Brazil announced in December that it would lowerdiscounts on its wholesale prices, effectively raising its

truck prices by 25 percent. The company had previouslyprepared the public for the move by telling the press it wasexpecting its worst performance in Latin America this yearsince 1957, mainly because of losses accrued by its Braziliansubsidiary.

Scania attributed these losses, which amounted to aroundUS$45m for the first nine months of the year, to higher costsfor steel, aluminium, electronic components and tyres. It alsosaid Brazil’s 30 percent devaluation in early 1999 was anothercontributory factor, given that around 60 percent of itscomponents were quoted in US dollars. Furthermore, Scaniaalleged its truck prices in Brazil were far too low; while atruck before taxation cost US$65,000 in Europe, in Brazilthis was just US$40,000.

Despite Scania’s gloom over a lack of profitability, saleswere up nearly nine percent to 4,394 units for the periodJanuary to October (4,043 for same period in 2000). Scaniaalso remained leader of Brazil’s heavy truck segment with a29.3 percent market share up to October (28.1 percent in thesame period in 2000).

Marcopolo developsSouth African unit

Brazil’s Marcopolo began operating its own plant inJohannesburg, South Africa at the end of November. The

factory, which was bought from Volvo for US$1.2m, willhave capacity to assemble 700 bus bodies, 300 in the firstyear of operations. Marcopolo intends to invest a total of

US$3m and expects an annualturnover of between US$12m andUS$15m.

The company will initiallysend partially knocked down(PKD) kits for long-distancebuses to South Africa from itsCaxias do Sul plant in RioGrande do Sul State. There thebodies will be attached to the

chassis and finishing work completed. Urban buses will atfirst be sent in semi-knocked down (SKD) format. Both busmodels will eventually be sent to South Africa in CompleteKnockdown Kits (CKD).

Marcopolo already has a joint venture with Scania inSouth Africa at a leased plant in Pietersburg that producesbus bodies for all types of chassis including those built byVolvo, Mercedes-Benz, Scania and MAN. It is currentlyassembling 340 urban bus consignment, which should becompleted by April 2002. The plant’s equipment could thenbe transferred to the new plant.

Iveco to transfer operationsfrom Argentina to Brazil

Fiat is to transfer some, if not all, of its Iveco plantoperations at Cordoba in Argentina to Sete Lagoas (Minas

Gerais State) in Brazil during 2002. Fiat Brazil confirmedthe move on December 12, two days after Fiat announced itsglobal restructuring plan closing 18 plants and dismissing6,000 staff.

Fiat’s Turin head office said Iveco Argentina operationswould all be moved to Brazil but initially Fiat Brazil under-

stood this would only include itsheavy truck line. Iveco alsoproduces medium trucks inArgentina and an Iveco Argentinaspokesman was reported in theBrazilian press as expressing ahope that this line would becontinued there. Only 120 staffwork at the Cordoba truck plant.

The Brazilian truck plant is anIveco-Fiat joint venture. It hascapacity to produce 20,000 units

per year of Daily (3 and 5.3 ton chassis) and Ducato models.Iveco production in Brazil began in 1999 at the US$240mplant. While it produced the Ducato, the Argentine plantmade the EuroCargo medium truck and two heavyweights:the EuroTech and EuroTrekker. When Iveco was building theSete Lagoas plant before the serious decline in Argentina’sfortunes, it was forecasting a US$800m turnover from thetwo plants by 2002.

Iveco has no plans for any closures in Brazil, in fact itaims to expand its presence. The company has 30 concession-aires for its range of light, medium and heavy trucks andplans to have 100 accredited dealers in 2002.

Scania Latin Americaappointments new President

Scania has announced that its head of commercialoperations in Argentina, Hans-Christer Holgersson, will

become President of Scania Latin America (SLA) on April 12002. He will also become Senior Vice President andmember of Scania Group management as of the same date.Meanwhile, Arne Carlsson, who is currently acting Presidentof SLA, will resume his position as Technical Director untilAugust 1 2002, when Anders Nielson, currently head ofScania Cabs in Sweden, will succeed him. As of that date,Carlsson will act as Senior Advisor to the SLA ExecutiveCouncil until his retirement in December 2002. MatsGunnarsson, currently Managing Director of ScaniaLuxembourg, will take over as head of commercial vehiclesin Argentina.

Marcopolo intends to

invest a total of US$3m

and expects an annual

turnover of between

US$12m and US$15m

The Brazilian truck plant

is an Iveco-Fiat joint

venture. It has capacity

to produce 20,000 units

per year of Daily and

Ducato models


Volvo • Scania • Daewoo • MAN • Ashok Leyland • Nissan Diesel

SOUTH AMERICA / ASIA11


Volvo shuts Peru truck plant

Volvo permanently closed its truck assembly plant in Peruduring December, citing excessive world production,

Peru’s current economic crisis and the high volume of usedtruck imports as reasons for the shutdown. A total of 65workers were laid off.

Scania expandsits Mexican sales network

Scania de Mexico said it would open five new dealershipsthroughout Mexico by the end of December. The

dealerships will be located in the cities of Tijuana, Culiacan,Veracruz, Tampico and Saltillo. The company also said it hasinvested US$1m in a new dealership in Santa Catarina, in theindustrialised state of Nuevo Leon. The dealership isexpected to generate around 40 percent of Scania’s annualsales in Mexico.

Daewoo in talksto sell Kunsan truck plant

Daewoo Motor is currently negotiating the sale of itsdomestic Kunsan truck factory. Although Daewoo would

not identify the potential buyer, local newspaper reportsclaimed it to be Australia’s Golden Orb Technologies.According to the reports, the Australian Company hasoffered to pay around US$80m for the plant, which has acapacity of 20,000 units per annum. Meanwhile, SouthKorean baseball cap maker Young An Hat Co has expressedan interest in acquiring Daewoo’s bus plant in the southernport city of Pusan. The plant has annual capacity of 6,000large buses. The Kunsan and Pusan plants were not includedas part of the MOU signed by Daewoo and GM inSeptember.

MAN Chinese JV talksnear completion

MAN is close to establishing a truck manufacturing jointventure in China, according to a report in Financial

Times Deutschland. The company’s truck chief HakanSamuelsson told the newspaper that MAN had alreadysigned a letter of intent and added that he expected a quickconclusion to the negotiations. The potential partner isthought to be bus manufacturer Luoyang Yutong Automotive,which is located in the central Henan province.

Ashok to commenceexports to Bangladesh

India’s Ashok Leyland has signed a long-term agreement forthe supply of 500 truck chassis valued at over US$6m to

Bangladesh. Under the agreement, the chassis will besupplied in CKD form for assembly by Pragoti Industries, aBangladesh government undertaking under the Ministry ofIndustries.

The deal follows an earlier agreement under which 330truck chassis were supplied and another 50 Stag minibuschassis are currently being shipped. The company is alsomidway through the execution of an order for 500 minibuschassis to Egypt. The vehicles are being assembled atEngineer Automotive Manufacturing Company, owned by theGovernment of Egypt. The bus bodies are built locally.

Ashok Leyland exported 1,135 vehicles in the periodApril-October 2001, slightly down on the 1,148 vehiclesshipped in the same period in 2000 but still outperformingthe overall Indian market, which registered a drop in exportsof 28 percent.

Nissan Diesel dissolvesPhilippine bus venture

Nissan Diesel is to quit its tourist bus manufacturingbusiness in the Philippines as part of its overseas business

consolidation strategy, according to a report in the NihonKeizai Shimbun. The company will on December 31 dissolvethe joint venture, Nissan Diesel Philippines Corp., of whichit owns 48.5 percent. Other shareholders include trading firmNichimen Corp., Fuji Heavy and several local firms.

The joint venture, which manufactures large tourist busesin a technical tie-up with Jonckheere, the Belgian coach-builder, was started in 1991 to sell buses domestically andexport them to Japan. It was touted as the first example offull-fledged bus exports to Japan, but has only ever achievedlacklustre earnings. Its operations will be integrated withthose at Nissan Diesel’s Ageo plant in Saitama Prefecture,Japan.

Losses from the dissolution have already been included inthe parent’s earnings for the current business year throughMarch, with no changes necessary to Nissan Diesel’s full-year outlook. The number of employees has already fallen toaround 40, down from a peak of about 400, and they will bedismissed in the near future.

Nissan Diesel posted a net loss of Yen 44bn in the yearended March 2000, prompting the company to implementstaff cuts, asset sales and other restructuring measures.Though turning a net profit of Yen 600m in the year endedMarch 2001, the company intends to further review its earn-ings structure and consolidate operations into Japan, the US,China and Indonesia.


Scania • Diahatsu • Press Kogyo • Delphi • MPZ

ASIA / COMPONENTS12


Scania invests in South Korea

Scania announced mid-December that it will investUS$1.3m in a new distribution facility in Sacheon,

southern South Korea. The company is also studying thefeasibility of developing Sacheon as a new hub for itsexpanding business in the country.

As part of the establishment of Scania’s new facility, thecompany has signed an agreement-in-principle (letter ofintent) with the local provincial administration regarding theallocation of land and other support for the development. Theintention is to successively concentrate most of thecompany’s strong and rapidly growing operations in Korea inthis location. In view of the present growth in volumes,Scania is running the risk of a capacity shortfall in Korea.The agreement with the provincial administration providesscope for further investment up to a total of US$30 millionover a five-year period.

Further investment could include expansion of the localbodybuilding operation, which is presently located in Naju. Theconstruction of a new central parts warehouse is also planned.Sacheon is strategically located close to two airports and tosome of South Korea’s most important deep-water ports.

Following the economic crisis of 1997-98, South Koreahas again become one of Scania’s strongest markets in Asia.The company’s new sales of heavy trucks, which declined toalmost zero during the crisis, will reach about 1,200 units thisyear. As the market leader among imported makes, Scaniadelivered 1,100 trucks by 1 November 2001.

Daihatsu considersHijet production in China

Daihatsu is considering joint production of Hijet compactcommercial vehicles with Tianjin Automobile Xiali

Corporation. The company is currently discussing details ofthe deal with parent Toyota, including the level of output andwhen to start production, a spokesman said. Daihatsu mayalso choose to provide the technologies without jointlymanufacturing the vehicles.

Malaysia buys 60 Scania fire engines

Scania is to supply 60 f ire engines to Bomba, theMalaysian national fire and rescue service. The vehicles

will be built on Scania’s two-axle chassis, powered by a 9-litre engine and equipped in Kuala Lumpur by CMETechnologies. Deliveries are scheduled for completion by theend of 2002.

The order brings the total number of Scania fire enginespurchased by Bomba to 100; the previous 40 were supplied inthe latter half of the 1990’s. The latest deal includes a service andmaintenance contract, as well as a driver training agreement.

Press Kogyo to focuson truck parts

Japan’s Press Kogyo has said it will withdraw from vehicleassembly and sales in December 2001. The moves will

enable the firm to dissolve its unprofitable operations andfocus on its core business ofpressing truck parts.

Having begun vehicle assem-bly under contract in the 1960s,Press Kogyo once enjoyed annualsales of nearly Yen 100bn(US$807m). However, ordershave dropped sharply in recentyears as its clients start to assem-ble their own vehicles.

The firm will shut down itsFujisawa assembly plant and liquidate its sales subsidiary,which was set up in 1988, but has been incurring pre-taxlosses since fiscal 1998.

Press Kogyo has lowered its fiscal 2001 group salesprojection from Yen 96bn (US$775m) to Yen 85.5bn(US$690m) due to declining demand for parts and the with-drawal from the assembly business. It also expects to incur aYen 3.45bn (US$27.9m) net loss as a result of paper losses onsecurities holdings and losses resulting from the assemblyplant closure.

Delphi sells compositespring business

Delphi has sold its Liteflex composite spring business toa newly-formed company, Liteflex LLC, based in

Dayton, Ohio. The National Composite Center also has aninterest in the new company, although financial terms werenot disclosed. The springs are made of f ibre reinforcedepoxy and are used in cars and trucks. A typical example isthe composite anti-roll bar links used in the latest LandRover Discovery). Delphi decided to sell the business inFebruary 2001 because it was outside the group’s corebusiness areas.

MPZ launches heavy-duty bearings

MPZ of Belarus has begun production of large conicalbearings for MAZ dump trucks and MoAZ special

vehicles. According to the chief technologist of MPZ,Anatoliy Pavlovich, the production of yet another uniquemodel of one-row bearings intended for the car industrywill have been won by the end of the year. A new automaticproduction line is already being installed for thesepurposes.

Orders have dropped

sharply in recent years

as its clients start to

assemble their own

vehicles


Volvo

TECHNOLOGY13


Volvo has invested €600m into anupdated and face-lifted FM and FH

range of heavy truck chassis, witharound 25 percent of the money beingdevoted to diesel engine development.The largest single engine project is anall-new 9.4-litre engine, designatedD9A, which effectively replaces thecompany’s 7.3-litre D7 (enlarged from6.7-litres only four years ago) and 9.6-litre D10, whose basic design datesback nearly 40 years.

The D9A engine becomes an optionin the lower-cabbed FM truck range,initially at ratings up to 340bhp, thoughwith outputs of at least 380bhpprojected. It goes into production atVolvo’s main Skovde engine plant atthe beginning of March and is about80kg lighter than the outgoing D10,despite embodying the inherent struc-tural robustness conferred by a unit-injector fuel system actuated from themain (overhead) engine camshaft.Some 15kg of weight is saved in thecylinder head casting alone by Volvo’slatest foundry technology at Skovde,which interfaces computer-aidedcomponent design and computer-control of the casting process, includ-ing molten metal pouring.

Both the D9A and the updated 12-litre, dubbed the D12D, are equippedwith the latest type E1 Delphi EUIs with‘internal’ solenoid/spill-valves. Theresult is a more compact injector instal-lation that allows more cylinder headspace for an optimised valve gearlayout. Another feature first developedby Volvo for the D12 and now available

on the smaller D9 is the VEB enginebrake, a ‘foundation brake saving’ vehi-cle retarder that intervenes in the normalvalve opening/closing sequence tocreate an ‘air pumping’ load on the driv-eline. For the first time on a Volvoengine, the D9’s timing gears are on therear of the block, simplifying enginepower-take-off drives and cutting radi-ated noise, contributing to a 2dBA in-cab sound level reduction.

With the introduction of the D12D,Volvo’s mainstream heavy truck enginehas been extended in maximum power

from 460bhp up to 500bhp. Thisincreased power is due in part to theuse of turbocompounding, a techniquefirst applied by rival Scania. Thoughthe same principle (of channelling theexhaust gases leaving the mainturbocharger into a second turbineconnected to the engine flywheel) isadopted by both Swedish enginemakers, there are key differences in thetwo turbocompound installations.Where Scania relies on its UK-basedturbocharger supplier Holset (aCummins subsidiary) to make what is aradial power turbine and its accompa-nying reduction gears, Volvo has calledon its own aerospace division’s UnitedTurbines offshoot to supply what isclaimed to be a more efficientSwedish-made axial turbine. Volvo’sturbocompound reduction gears, whichtypically step down a turbine speed of45,000rpm to only about 1500rpm foran acceptable flywheel input, are madeby VCST, a Dutch company onceowned by Volvo.

Apart from engines, the other maindevelopment introduced with theupdated FM and FH chassis is an all-new automated mechanical transmis-sion, known as I-shift. Like thecompany’s Geartronic design launchedin the mid-90s (which continues forextra heavy-duty applications), I-shift iselectronically managed and does away

Volvo unveils revisedFH and FM ranges

by Tom Cunningham

Left: Volvo FM cab – the revised Volvo FM and FHshare what is essntially a common cab shell, whichhas restyled front grille and revised headlightsRight: FH16XL cab

I-shift is electronically managed and does

away with the clutch pedal, enabling full

automatic mode to be selected


Volvo

TECHNOLOGY / ENGINE TECHNOLOGY14


with the clutch pedal, enabling full auto-matic mode to be selected. Road gradi-ent is sensed and actual all-up vehicleweight is computed by measuring the‘resisting torque’ that must be overcometo negotiate that gradient. Hence thecorrect gear for moving away is alwaysselected, and subsequent shifts are madeat the best time, according to the trans-mission mode selected, for example‘economy’ or ‘performance’. There iseven a ‘freewheel’ mode, which auto-matically moves the gearbox into neutralwhen neither drive power nor enginebraking is required. The same electroniclogic is applied to drop down a gearunder overrun conditions in order toraise engine revs and thus the retardingeffect of the engine brake. This becomesespecially necessary on the 500bhp 12-litre engine, where the turbocompoundinstallation inherently reduces engine

brake efficiency. Critically, with I-shift Volvo claims

to have emulated the rival ZF AS-tronictransmission in technology that wasstriven for less successfully in the firstGeartronic system and in some other‘clutch-pedal-less’ automated mechani-cal transmissions. Clutch engagementand control of engine revs are optimallybalanced for smooth hill starts andduring slow-speed manoeuvring, typi-cally when inching backwards at a ware-house loading dock.

Improved electronic management hasallowed conventional mechanical fric-tion-cone synchronisers to be elimi-nated; input and output rpms are insteadsynchronised through electronic fuelsystem control of engine speed.Geartronic’s two crawler ratios aredispensed with, making I-shift a 12-rather than a 14-speed box – a move

justified by the enhanced torque at lowerspeeds on the latest D9 and D12engines. Consequently, the I-shift trans-mission is 70kg lighter and 150mmshorter than Geartronic. A furthernovelty is that I-shift’s gear selectorlever is mounted directly on to the sideof the driver’s seat.

The latest Volvo FM and FH modelsalso look new with restyled front grilles,revised headlights and a more moderninterior distinguished most obviously bya new curved wrap-around fascia. Thetwo ranges’ essentially common cabshell, which is mounted higher on theFH to reduce engine ‘hump’ intrusion, isalso more spacious; the day cab is150mm longer, front-to-back. Otherdetailed improvements are aimed atmeeting a wider range of operatorrequirements on chassis height, framelength and fuel tank capacity.

All-new Volvo 9-litre dieselanticipates Euro 4 and 5

As the first all-new truck or bus diesel from Volvo for overeight years, the 9.4-litre D9A engine has immense

significance, made even greater since the Swedish companytook control of Renault’s truck business earlier this year. Thenew Volvo diesel has been designed from the outset withfuture Euro 4 and 5 emissions limits, through to 2008,known and acknowledged. Between now and Euro 4implementation in 2005/6, the D9A is due to become thebread-and-butter fleet ‘cruiser-weight’ engine for all Volvoand Renault heavy truck chassis sold in Europe. In Volvo’slow-cab FM chassis, in power ratings from 260 up to380bhp, it will replace both today’s 7.3-litre D7C and thecompany’s venerable 9.6-litre D10B.

Weighing around 860kg, the D9A engine is some 240kglighter than Volvo’s now eight year-old 12-litre design, manyof whose features, notably its now well-proven electronicunit injector (EUI) fuel system, actuated by a single over-head camshaft, are inherited by the new diesel. Its Delphi E1injectors, manufactured at Stonehouse in the UK, are thesame as those adopted six months ago for higher-poweredversions of the 12-litre. Their slim all-cylindrical profile,achieved by housing the solenoid and spill-valve centrally onthe same axis as the main plunger, does away with thecumbersome separate offset housing which has hithertocharacterised all EUIs, whether made by Delphi or Bosch.Bringing the spill-valve closer to the plunger also reduces

pumping losses, to the benefit of fuel consumption, andimproves responsiveness to the fuel system electroniccontrols.

Though Delphi promotes the E1 injector as capable ofgenerating 2000bar nozzle pressures, in the Euro 3 VolvoD9A and the latest-generation D12D (12-litre) engines it is

held back to about 1700bar.However, Volvo powertrain vice-president Sten-Åke Aronssonsays the slimline injector’s extrapressure capabilities will beneeded for Euro 4 when, in moreadvanced E3 form (WCVDecember), it will crucially helpcut particulate emissions further.By that time the D9 is likely to beup-rated to at least 400bhp. AllD9A engines and D12Ds of

420bhp or more have Delphi E1 injectors. Bosch has yet tooffer a unit-injector without an offset solenoid, which couldbe physically accommodated in the D9A engine, but it shouldhave an ‘E1 equivalent’ before long.

A departure for Volvo is the use on the D9A of rear-mounted timing and auxiliary drive gears immediately aheadof the flywheel. This feature, which will be shared by thecompany’s new-generation, unit-injected 16-litre flagshipengine due in 2003, brings a significant reduction in radiatedmechanical noise, as measured at the front of the truck espe-cially, as well as in the cab.

The new Volvo diesel has

been designed from the

outset with future Euro 4

and 5 emissions limits,

through to 2008, known

and acknowledged


Westport • Isuzu • MAN • Cummins

ENGINE TECHNOLOGY15


Westport and Isuzu co-operateon dual-fuel diesel unit

Vancouver, Canada based Westport Innovations is nowworking with Isuzu to develop a dual-fuel (natural

gas/diesel) version of its latest light-duty truck diesel engine.The company says the programme is expected to besimplified by the ability to use Westport components alreadydeveloped for converting UK-built Ford Duratorq van and cardiesels to dual-fuel operation.

Westport’s latest HPDI (high pressure, direct injection)technology, of the kind first seen on the Canadian company’sprototype installations on Cummins’ 15-litre ISX/Signatureengines, is employed in the new small diesel conversions. TheHPDI technology, which retains the diesel’s compression-ignition cycle, is crucially based on the use of a patentedinjector able to inject both the primary fuel (natural gas) andthe pilot fuel (diesel) directly into the cylinder. The ratio ofnatural gas to diesel never goes lower than about 94 percent.

Westport plays down the term dual-fuel in relation to theHPDI system, preferring to describe its converted power unitsas natural gas engines utilising a diesel fuel ‘micro pilot’. Itis claimed to emit much lower pollutant emissions than themanifold spray dual-fuel adaptations of the type now avail-able from numerous converters on both sides of the Atlanticand as original equipment from Caterpillar.

The HPDI system is designed mainly for application tovehicles that carry gas in liquefied form. It is pressurised to240bar by a hydraulically driven pump, vapourised, thendelivered to the fuel injectors. The diesel micropilot fuel ispressurised and delivered to the injector using a high-pressurefuel pump of the type now extensively used in common raildiesel injection systems. Each Westport HPDI injector hasone solenoid to regulate diesel fuel metering and timing andanother to do the same for the NG.

MAN is Westport’s main European collaborator. A jointventure agreement between the German truck and enginemaker and the Canadian gas engine specialist was signed inSeptember 2000. Prototype testing on an HPDI enginederived from MAN’s established 12 litre in-line heavy truckand bus diesel is just beginning and the term of the JV agree-ment has been extended to March 2002.

Westport ready to pushnatural gas engines in Europe

Westport says it is getting ready to promote its diesel-to-gas technology in Europe. At a major presentation at

the Canadian Embassy in London, interested partiesincluding government departments, environmental groups,gas suppliers and vehicle manufacturers were told ofWestport’s ambitious plans.

The event was jointly hosted by Cummins, Westport’s part-ner in an agreement signed last March, under which the newly-formed joint-venture company, Cummins Westport took overthe marketing as well as the engineering of all existing andfuture NG-fuelled Cummins’ engines. Global marketing ofthose engines is headed by Scott Davidson, an AmericanCummins manager who until early in 2001 headed upCummins’ European on-highway marketing activity. However,the Westport-engineered JV gas engines will continue to bemanufactured at Cummins’ plants in the US, with gas-dedi-cated components being supplied through Westport.

In his presentation, Westport CEO David Demers went outof his way to make clear that his company’s ongoing diesel-to-gas research and development work in collaboration withother engine makers, notably MAN in heavy-duty and Fordand Isuzu in van/car power units, was not affected by theCummins JV.

Cummins plans to re-introduce its 8.3-litre C Seriesengine in gas-fuelled form for Europe early in 2002. Inratings from 250 to 280bhp and designated C8.3 Gas Plus, itfeatures more advanced fuel system electronics which,combined with a knock-sensor, help compensate for varia-tions in quality of gas supply, especially its methane content.The engine will necessarily have to be Euro 3 compliant.Sales of Cummins’ established 8.3- and 6-litre NG engines toUK OEMs like Dennis and Seddon Atkinson, typically foruse in urban-based waste-collection vehicles, had to stop inSeptember 2001 because of Euro 3 legislation.

Achieving compliance with Euro 3’s 1.6g/kWh tailpipemethane limit on the spark-ignited lean-burn C8.3 Gas Plusand smaller C5.9 Gas Plus due later in 2002 will be a majorchallenge, admits Westport. A special methane-reductioncatalyst will be required, though Westport is not yet ready toprovide further details.

Only the Finnish Kemira methane catalyst fitted Scania’s11-litre engines being retro-converted in the UK from dieselto gas are known to make the Euro 3 methane limit achiev-able with lean-burn engines. Even then some engine manu-facturers have cast doubt on its durability. However, Kemirasays the durability issue is being addressed. Indeed, thecompany is currently looking at the possibility of ‘regenerat-ing’ the catalyst when ‘poisoning’ sulphates have built up onits surface, by periodically switching from a lean to a richgas-air mixture, thus briefly raising exhaust temperature toburn-off the sulphates.

MAN engine converted to NG by Westport


Westport • Grundfos • Haldor-Topsoe • Toyota • General Motors

ENGINE TECHNOLOGY / LIGHT COMMERCIAL VEHICLES16


100 percent gas-fuelledengines are on the way

If early trials live up to their promise, Westport’s newest gasengine technology, provisionally designated NGDI (natural

gas direct injection), could well replace both the costly spark-plug equipped lean-burn and the company’s own inherentlyless expensive HPDI diesel-pilot technologies in the longerterm. Retaining a diesel’s compression-ignition cycle butwithout the need for spark plugs, NGDI is nevertheless a 100percent gas-fuelled system.

The new system is claimed to achieve the lowest possibleemissions while retaining the performance, especially thehigh torque characteristics, of a diesel. It has been appliedfirst to a small 1.8-litre Dagenham-made Ford engine, basedon the Endura direct-injection diesel that powers Escort andFiesta car-derived vans, but Westport’s engine developmentmanager, Romanian-born Buerebista Ursu, says it points theway forward for all sizes of natural gas engine.

Ignition of the gas-air mixture uses Westport’s newlydeveloped ‘hot surface’ technique. Engine start-up and subse-quent running rely on a new type of glow plug, with its heat-ing element on the surface of the ceramic plug rather thanburied inside. A new and patented gas injector has also beendeveloped, which injects the gas-air mixture between theglow plug and an adjacent flow-control ‘shield’. Nozzleopening is controlled electronically using a revolutionarydevice making use of a crystalline material called Terfenol.

A cylindrical bar of the material is located within amagnetic coil. When a current is passed through the coil thebar extends in length. The principle is similar to that of thepiezo devices being used by Siemens as an alternative tosolenoids in a new generation of injectors for small diesels, inwhich the piezo material changes its dimensions when acurrent is passed directly through it. Ursu says Westport’sTerfenol-based gas injector, supplied by a US company calledEtrima, is cheaper to manufacture and more durable than apiezo equivalent, while offering equally flexible control ofinjection timing and nozzle opening travel, thus regulatinginjected fuel quantity.

Ursu concedes that a permanently active glow plug makesbig power demands, which on a large truck engine willpresent a challenge. However, he says this challenge could bemet in the future through the adoption of 36/42-volt electricalsystems on trucks.

Danish companiesdevelop deNOx system

Two large Danish companies, Grundfos and Haldor-Topsoe, are collaborating to produce an urea/ammonia-

fed SCR (selective catalytic reduction) diesel deNOx systemfor trucks and buses. When Euro 4 legislation is

implemented, making SCR essential if the 3.5g/kWh NOxlimit is to be met without compromising fuel efficiency, theDanes plan to be a strong market contender against the threeor four other SCR providers who have already made knowntheir intentions.

Grundfos, best known for its expertise in pumping tech-nology, has developed the critical SCR dosing unit, whichmatches the amount of atomised liquid urea delivered into theexhaust stream ahead of the system’s main deNOx catalyst. Itclaims to make use of a unique ‘digitised’ pump, driven bycompressed air taken from the vehicle’s brake system andcontrolled by an electronic CANBUS regime interfacing theengine and fuel system management module.

Haldor-Topsoe is providing the catalysis know-how, whichincludes an ammonia adsorption facility that stores andreleases reductant to ensure an adequate supply of urea-derived ammonia. Reductant flow is said to be controlledwith sufficient precision for the system not to need a down-stream ‘ammonia slip’ catalyst.

The Grundfos-Haldor product is expected to provide afurther competitor for SCR system developments alreadyannounced by Siemens, Bosch and, in a project being spon-sored by DAF Trucks, the Dutch National Laboratory.

Tacoma to be built in Mexico?

Toyota may elect to assemble its new Tacoma pick-up inMexico. Production is due to start in 2004 and, although

the manufacturer has yet to announce its decision, Mexico islikely because of its comparatively low costs andmembership of NAFTA.

GM pick-ups to run onethanol/petrol mixture

GM is to start producing Chevrolet Silverado and GMCSierra full-size pick-ups that will run on E85, a mixture

of ethanol and petrol. Ethanol can be made from corn, andproduces lower exhaust emissions than petrol, says themanufacturer.

This ‘flex fuel’ option, as GM terms it, will be made avail-able in the US on the Silverado 1500 and Sierras equippedwith the 5300 Vortec engine during the first quarter of 2002.It will add roughly US$250 to the price. The trucks can berun solely on petrol if E85 cannot be obtained. Chevrolet S-10 and GMC Sonoma compact pick-ups that can use the fuelare also available.

E85 is comparatively expensive and on sale at only 100 orso service stations in the whole of the US. However, its envi-ronmental credentials plus fears over the US’s dependabilityon imported oil at a time of international crisis may boostinterest in it. Monsanto has already ordered 50 E85Silverados.


Ford • Citroen • General Motors

LIGHT COMMERCIAL VEHICLES 17


Ford’s ‘Baby Transit’ nears launch

Along-wheelbase concept version of Ford’s so-called ‘BabyTransit’ will be unveiled at the Amsterdam Commercial

Vehicle Show in February, followed by a short-wheelbaseconcept model scheduled to appear at the BritishCommercial Vehicle Show in Birmingham, UK, in April.Both concepts are likely to be extremely close to the finishedarticle, which is set to go on sale in July.

The Turkish-built van will compete with compact panelvans such as Fiat’s Scudo, although Ford hopes it will alsoappeal to buyers of high cube vans like Citroen’s Berlingo.The demise of the Escort Van and Fiesta-based Couriermeans that Ford won’t have a high cube light van in its rangeby the time Baby Transit is launched.

F-Series remainsbest-selling US vehicle

Pick-ups grabbed four of the top-10 slots, including firstand second place, in the list of best-selling vehicles in the

US in the eleven months to the end of November 2001.Ford’s F-Series was number one once again with a staggering827,319 sales, up by 1.6 percent on the 814,366 recorded inthe previous year. Number two again, and some way behind,was Chevrolet’s Silverado, registering 650,523 sales. Thatwas a healthy 10.7 percent improvement on the 587,759recorded in the same period in 2000.

Dodge’s Ram pick-up captured the number seven positionwith 314,285 sales, an 11 percent drop from the same period in2000, when it placed sixth. Ford’s triumph in the US pick-upmarket was somewhat tarnished by Ranger’s performance; ittumbled from number seven to number nine, with sales down17.9 percent, from 312,582 to 256,488. Looking further down thesales league ladder, GMC’s Sierra pick-up appeared at number16, with sales up 10 percent from 173,847 to 191,225. It didn’tappear in the top 20 during the same period the year before.

Ford Transit not headed for the US

Ford has decided against selling its Transit van in the US.The idea, first mooted around 18 months ago, was that a

high-cube, lightweight, fuel-efficient vehicle like Transitwould be ideal for e-commerce home deliveries. However,uncertain prospects for the US economy have made such aproject rather less appealing.

The announcement follows Renault’s decision to cancelplans to sell a re-badged Master in the US through Nissandealerships. However, Iveco is still considering selling theDaily model there in conjunction with GM, andDaimlerChrysler is already marketing Sprinter through theFreightliner network. A third player could be the replacementfor Fiat’s Ducato, which is due for launch at the AmsterdamCommercial Vehicle Show in February.

Biggest-ever orderfor Citroen in the UK

Around 1,000 Citroen Berlingo vans will soon be put intoservice with British Sky Broadcasting of the UK. It is the

biggest single order for Citroen light commercials everplaced in Britain, and replaces the company’s entireinstallation and service fleet. The company ordered themafter two years operating experience with the vehicle. Aprevious deal put 500 into service.

The latest Berlingos are all 600DXs and will be deliveredby mid-February. Sprayed on the assembly line in the opera-tor’s favoured shade of blue, they are fitted with nearsidesliding load area doors. Van Liners of Bolton, UK, is ply-lining the cargo areas, and equipping the Citroens with inter-nal racking plus roof racks.

The Berlingos are being acquired under a two-yearcontract hire with maintenance agreement with Arval PHH.They will clock up roughly 40,000 miles apiece in servicewith BSB.

GM drops out of UK pick-up market

General Motors has withdrawn from the purpose-builtpick-up market in the UK. Its subsidiary Vauxhall

stopped taking orders for the Brava in October, and the finalexamples will be delivered to buyers by mid-March 2002.“The pick-up segment represents just five percent of theBritish light commercial market, and Brava’s share is in

decline as the segment biasmoves from utility to leisure,” aVauxhall spokesman said. “Wedo not have a Brava that’sdesigned for leisureapplications.”

Brava is built in Japan byIsuzu. Unfavourable exchangerates make it much less prof-itable to sell in Britain than itonce was, according to thespokesman. However, the deci-

sion is slightly surprising, given that Vauxhall had recentlyanswered criticisms that Brava is under-powered by swap-ping its 76bhp 2.5-litre turbodiesel for a 2.5-litre turbod-iesel producing 100bhp. Nor would it be all that diff icultto produce a better-specif ied Brava for leisure applica-tions; most of Vauxhall’s competitors in the sector manageto build and market such vehicles without too many prob-lems.

However, Vauxhall is right to point out that UK pick-upvolumes are low, with sales a fraction of those netted in theUS. It probably considers that its marketing efforts would bebetter employed in promoting the new Combo high cube vanand UK-built Vivaro compact panel van.

“The pick-up segment

represents just five

percent of the British

light commercial market,

and Brava’s share is

in decline”


Switzerland • Spain • UK • EU • California

LEGISLATION / ENVIRONMENT18


Switzerland consultson sulphur-free fuel for 2004

The Swiss federal government has launched a consultationon proposed legislation, which would introduce

incentives in favour of sulphur-free diesel and petrol from2004. The proposed law would increase the tax on motor

fuels containing sulphur by SFr0.03-0.05 (€0.02-0.03), whiletaxes on sulphur-free fuel, ie fuelcontaining sulphur levels of nomore than 10 parts per million,would remain unchanged. TheSwiss authorities are hoping thatthe introduction of the incentivefor sulphur-free motor fuels will

have the same effect as the introduction of a similarincentive for sulphur-free heating oil, which led to thevirtually instantaneous introduction of sulphur-free oilacross the country.

If the legislation were eventually introduced, Switzerlandwould become the second country in Europe to launch incen-tives to encourage the early introduction of sulphur-free fuel;Germany is to introduce incentives from 1 January 2003.Even though Switzerland is not a member of the EU, the factthat another country in Europe is proposing an early move tosulphur-free fuel provides more ammunition to those whowant the date of its proposed introduction throughout the EUbrought forward from 2011. EU environment ministers haverecently debated a compromise proposal, which would bringit forward to 2009.

Spain to increase fuel duties,while Italy announces a freeze

The Spanish national and regional governments haveagreed to increase fuel duties by up to 17 percent, while

the Italian government has announced it will freeze fuelduties for 2002. The Spanish announcement is rathersurprising as the Spanish government has been at theforefront of opposition to harmonising energy taxes inEurope, which would require the country to increase motorfuel taxes. By next September, the average price of a litre ofdiesel in Spain could have increased from €0.27 to nearly€0.32, with the first half of the increase occurring nationallyon 1 January and the second half to be imposed fromSeptember at the discretion of regional authorities.

In Italy, the government has announced that it is to reformits carbon tax, which was introduced in 1999. The tax has notbeen without its problems, as it was suspended for a number ofmonths in late 1999/early 2000 as a result of increasing worldoil prices. The freeze in duty in 2002 has been announced forsimilar reasons – to slow down the rise in fuel prices.

UK investigates HGV charging

The UK government has finally acted on its promise to lookinto HGV charging in the country by issuing a

consultation paper on the likely options for a future chargingsystem. The paper was released to coincide with financeminister Gordon Brown’s pre-budget statement, whichoutlines the government’s intentions for next year’s budget.The government had announced the introduction of a ‘Brit-disc’ in the equivalent report last year, although the details asto what this would be were vague. The current consultationoutlines two possible options for the UK, a time-based charge,which could be based on the Eurovignette, or a distance-basedcharge along the lines of the Swiss or the proposed Germansystems. The system would be introduced in a way that didnot increase costs to the UK road haulage industry, as othertaxes on HGVs would be reduced accordingly.

Southern EU countries leadEurope’s 2001 air pollution league

An analysis of preliminary data for 2001, undertaken bythe European Environment Agency, reveals that air

pollution problems are significantly worse in southern EUcountries than in northern ones. In Italy, which experiencedmore days of poor air quality than any other country, the‘alert threshold’ for ozone was exceeded on approximatelyone day in two this spring and summer. The public must bealerted if ozone levels exceed this threshold, which is set at180µg/m3 averaged over one hour.

Over two-thirds of the 300 occasions when this thresholdwas exceeded occurred in the EU’s Mediterranean states, withalerts in France and Spain, as well as in Italy, outnumberingthose in Germany and the UK combined. The figures reflectthe problems that southern countries will face in meeting theEU’s long-term target of not exceeding ozone concentrationsof 120µg/m3, which is the World Health Organisation’s stan-dard, by 2020. This new requirement is set out in the new EUozone Directive, which is on the verge of becoming law.

Californian fleet diesel banfaces new legal challenge

The US Engine Manufacturers Association (EMA) isreported to be appealing against a district court ruling that

California’s ban on new fleet diesels is legal. The Californianrules, which were adopted by the South Coast Air QualityManagement District (SCAQMD) last year, require publicagencies operating fleets of over 15 vehicles to buy onlyalternatively fuelled ones, effectively banning the purchase ofdiesels. The EMA and the Western States PetroleumAssociation took legal action in an attempt to have the ruleoverturned, but recently lost their case.

Switzerland would become

the second country in

Europe to launch

incentives to encourage

the early introduction


DATA ANALYSIS19


Commercial vehicle manufacturers’ financial resultsA regular column with the latest quarterly financial results from the world’s leading commercial vehicle manufacturersby Jonathan Storey

JAPAN'S FOUR TRUCKMAKERS allmanaged to report an operating profit forthe first half of the fiscal yen ear endingMarch 2002. However, with an aggregatereturn on revenue of just 0.9 percent and adeteriorating demand outlook, the compa-nies are having to redouble their restructur-ing and cost-cutting efforts.Isuzu reported a consolidated operatingprofit of Yen 4.5bn compared with a yen ear-ago loss of Yen 23.0bn. The improvementprincipally reflected cost-cutting measuresand the weak yen boosting the value ofexports to North America. At the net levelthe company reported a loss of Yen 23.6bn,compared with a loss of Yen 22.1bn a yearearlier. The loss mainly reflected the Yen8.6bn adverse impact of special retirementallowances under an early retirement

scheme and a Yen 6.5bn loss on equityholdings due to falling share prices. For thefull year to March 2002 Isuzu now expectsYen 25bn in operating profit and a consoli-dated net loss of Yen 25bn compared withits initial forecast of a Yen 1bn profit. It nowexpects sales of 67,000 trucks in the fullyear, down 11 percent on the year and 13percent below its initial estimate, due tosluggish sales, particularly of trucks with acarrying capacity of about 2 tons.Hino now forecasts full-year sales of 36,300trucks, 8 percent higher than 2000/2001 but1 percent below its original forecast.Mitsubishi Motors is expecting to sell69,000 trucks and buses in the full-year,down by 5 percent from its initial forecast.Nissan Diesel is forecasting sales of 17,000trucks, slightly below its original estimate.

The pressure to restructure and cut costshas resulted in further consolidation, withIsuzu and Hino recently agreeing to stan-dardise their key components, includingtransmissions. They are also expected toreach an agreement on the integration oftheir bus businesses by the end of 2001.This follows other forms of co-operationannounced during 2001 such as:• all four truckmakers agreeing on a set of

common specifications for interior andexterior parts for "non-step" buses,which have low floors designed for theelderly and handicapped.

• the plan for Hino to supply medium-sized diesel engines to Nissan Dieselwith effect from 2004 when NissanDiesel will stop its in-house productionof such engines.

EUROPEAN PRODUCERS

DaimlerChrysler CVs Jan - Sep €(m) 20,974 21,414 (2.1%) (24) 979 (102.5)% 2 366,117 407,704 (10.2%)

Iveco Jan - Sep €(m) 6,247 6,159 1.4% 190 264 (28.0)% 2 115,237 118,700 (2.9%)

MAN Nutzfahrzeuge Jan - Sep € (m) 4,818 4,461 8.0% 34 236 (85.6)% 3 - - -

Scania Jan - Sep SKr (m) 37,900 36,203 4.7% 2,004 3,057 (34.4)% 2 35,165 39,416 (10.8%)

Volvo Truck & Bus Jan - Sep SKr (m) 99,075 56,822 74.4% 156 1,007 (84.5)% 2 120,388 69,224 73.9%

US PRODUCERS

Navistar Yr to Oct US$ (m) 6,722 8,451 (20.5%) (23) 159 (114.5)% 1 89,600 124,900 (28.3%)

Paccar (Truck) Jan - Sep US$ (m) 4,204 5,896 (28.7%) 126 479 (73.7)% 3 - - -

JAPANESE PRODUCERS

Hino Apr-Sep Yen (bn) 367.7 344.9 6.6% 3.8 (1.7) - 2 25,892 22,986 12.6%

Isuzu Apr-Sep Yen (bn) 830.7 724.6 14.6% 4.5 (23.0) - 2 159,900 171,100 (6.5%)

Mitsubishi Truck & Bus Apr-Sep Yen (bn) 352.4 359.3 (1.9%) 3.1 1.3 138.5% 2 68,000 74,000 (8.1%)

Nissan Diesel Apr-Sep Yen (bn) 186.5 203.6 (8.4%) 4.3 6.8 (36.9)% 2 12,459 13,253 (6.0%)

Notes: (1) Net profit (2) Operating profit (3) Pre-tax profit

Period Currency Revenue Profit Unit sales

2001 2000 Change 2001 2000 Change 2001 2000 Change


DATA ANALYSIS20


The recession leg of the current business cycle inAmerican medium and heavy-duty trucks is

drawing to a close and we are now entering therecovery phase. By contrast, the light-duty trucksegment in the US has been a remarkable recession-free zone for the last 12 years.

Trucks now account for half of what Europeanswould call the car market in America. According toUS definitions, trucks come in 8 gvw classes/sizes(see accompanying chart). The smallest Americantrucks are classified as light-duty vehicles fallinginto Classes 1, 2 and 3 (up to ~6 tonnes metric at theClass 3 cut-off point). These include the popularminivans, mpvs, jeeps, sport utility vehicles andpick-ups bought as personal transport alternatives orcomplements to passenger cars. In Europe, suchvehicles are usually classified as cars.

Analysts observe a demarcation line separatingAmerican trucks. Classes 1-3 light-duty truckstogether with passenger cars are called light vehi-cles and are the preserve of the car/auto andconsumer goods industry analysts. Classes 4-8 arecommercial truck territory belonging to industrialequipment and capital goods industry analysts (andreaders of WCV).

Truck industry analysts like to point out that theUSA’s best-selling cars are trucks. In the light vehi-cle segment, Ford’s F-series pick-up trucks, GMChevrolet’s Silverado range and the Ford Explorerwere Nos 1, 2 and 3 respectively in terms of unitvolume sales for January-November 2001. The F-series outsold the leading volume passenger car(Honda’s Accord) by a little more than 2:1. TMV inlight-duty trucks in the USA is now running at >8.5million units a year, recently edging marginallyahead of tmv in passenger cars for the first timeever. The design, development, production, market-ing and sales of these "consumer trucks" constituteone of the most interesting chapters in the history ofthe American auto industry.

Back in the commercial medium and heavy-dutytruck segments in the US, the collapse in new vehi-cle demand has been confined to Classes 7 and 8.Class 8, heavy-duty, is a segment in its own right.The medium-duty segment comprises Classes 4-7.Within this segment, there has been a fall, but nocollapse in demand for Classes 4-6 vehicles. Thedrop in sales of Class 7 trucks (-25 percent year-on-year) has been less severe than that for heavy-duty

Truck production and sales USAby Michael Hinks-Edwards

USA Truck Classification, Segmentation, Volumes

SEGMENT CLASS GVW* SALES* ytd %CHYA*

tons mnsLIGHT Class 1 up to 3 5.102 zero

Class 2 3.1 - 5 2.060 +1 000s

Class 3 5.1 - 7 79.136 -20

MEDIUM Class 4 7.1 - 8 44.683 +11Class 5 8.1 - 9.75 20.507 -16Class 6 9.76 - 13 37.190 -18Class 7 13.1 - 15 107.816 -25

HEAVY Class 8 15.1> 118.310 -36

*1 US ton=907.2kg Sales are retail units thru 10-01 (% change vs 10-00)

4

5

6

7

8

9

10

1989 91 93 95 97 99 01

USA Passenger Car and Light Truck TMVs

Passenger Car tmv 12mo rolling thru 11-01 Light Truck tmv (Classes 1-3) 12mo rolling thru 11-01

USA Medium + Heavy Truck Sales Production Inventory

SALES (tmv) lefthand scale 000s 3mo moving avge PRODUCTION lefthand scale 000s 3mo moving avge INVENTORY/PRODUCTION righthand scale 3mo moving avge

Classes 4-8 trucks thru 10-01

20

25

30

35

40

45

50

Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02

0

1

2

3

4

5

6

DATA ANALYSIS


21


vehicles (-36 percent) where some of the problemshave been self-inflicted.

Analysts tracking the market have noted thefollowing recent developments:-a) The key rate of change in sales pace of new

medium and heavy-duty trucks (tmv 12 monthrolling totals percentchya) is still negative, buthit bottom then began to improve in Q4 2001.

b) Production volumes of medium and heavy-dutytrucks have stabilised.

c) The stock/output ratio (inventory/production) formedium and heavy-duty trucks continues toimprove, but is still short of "normal".

There’s been no hard-number evidence of animmediate, large-scale direct September 11 effect onthe trucking industries such as can be seen in airlinesand US sales of cars, guns and American flags.Airport-associated trucking business is of coursedown, and delivery giants UPS and FedEx toldshareholders last November they were expecting a"quiet Christmas for 2001". On the other hand, theUS postal service said it would be adding moretrucks and using fewer airline services for deliveriesthrough the turn of the year holiday season.

Meanwhile, American commercial truck salesperformance by OEM remains a story of across-the-board unit volume declines for the major players.Mercedes (Freightliner) has fared best among theleaders losing volume in the medium duty segmentwhile Isuzu has been the only brand gaining volume.In the heavy segment, the VolvoGT (global trucks)brands have experienced contrasting fortunes. Mackhas maintained momentum in terms of market sharegain while the Volvo brand has lost ground. But thehardest-hit in terms of market share loss have beenNavistar and Paccar.

Navistar was always going to be the OEM mostvulnerable to recession in commercial trucks inAmerica. The company does little counterbalancingbusiness elsewhere in the world (Paccar owns DAFin Europe). Its truck sales are concentrated in therelatively high-volume Classes 7 and 8 where thesharpest falls in demand have been recorded. This isalso true of Paccar, but Navistar products haven’tcommanded the same price premium. Nonetheless,Navistar chairman, John R Horne, was namedManager of the Year 2001 by the American businessmagazine Stark’s Truck and Off-Highway Ledger. Inthe citation accompanying the award, Stark’s

USA Medium and Heavy Truck Sales

MEDIUMHEAVY

a Freightliner Sterling Western Starb Volvo Mackc Kenworth Peterbiltd Internationale Ford and Navistar are jv partners in Blue Diamond medium-duty trucksf DaimlerChrysler (Mercedes parent) has a 37% stake in Mitsubishi Motors Corpg GM has a 49% stake in Isuzuh segment totals incude data for minor volume participants not shown separately

Class 8 000s 10mo 01 %chya

a) Mercedes 47.327 -31.9

b) VolvoGT 28.344 -32.7

c) Paccar 23.209 -42.9

d) Navistar 18.630 -40.1

h) segment total 118.310 -35.9

Class 4-7 000s 10mo 01 %chya

e) Ford 47.862 -19.2

e) Navistar 46.700 -21.1

f) Mercedes 36.614 -8.6

f) MMC Fuso 2.684 -5.8

g) GM 30.297 -17.7

g) Isuzu 11.781 10.0

h) segment total 182.940 -16.1

0.5

1.0

1.5

2.0

2.5

98Q4 99Q4 00Q4 01Q4 02Q4

HEAVY TRUCK

MEDIUM TRUCK

ENGINE

partsbus

special duty truck

Navistar Sales Revenues by Product LineUSD millions 4Q rolling thru 01-Q4

commented that under Mr Horne’s stewardship, Navistar had "properlyprepared itself" with new products and alliances not only for the reces-sion, but for the ensuing recovery (when it comes).

As tacitly acknowledged by Stark’s and openly acknowledged by theentire community of truck analysts, Navistar’s survival through reces-sion this time has been secured by the performance of its engine busi-ness unit and financial services operations. Stripped of the profit contri-bution from these sources, Navistar might have been a bankruptcycandidate last year. Not so Paccar, which has once again demonstratedits ability to stay in the black in trucks during the toughest of businessconditions.Primary data sources for charts and tables include Ward’s AutoInfoBankand company press releases, annual and interim reports and accounts.TMV is total market volume (retail units).


22


DATA ANALYSIS

New Year is traditionally a time for predictions as well asresolutions. Business people in particular are familiar with

most of the famously wrong predictions and failed resolutionson record. But spare a thought for one of the most famouslycorrect predictions (or was it a firm resolution?) on recordfrom 1985. "The adoption of a single currency for Europe isinevitable within a matter of years". This January, Eurocurrency notes and coins come into circulation in Europe foruse in everyday transactions. Any predictions for theconsequences?

Back to the immediate future, most truck industry analystshave already written off 2002 as a generally bad year for busi-ness volumes and profits, or as MAN’s executives see it"gloomy prospects" for 2002. Many of the retrenchmentmeasures announced by truck OEMs last year still have to becompleted in terms of capacity and job cuts. This will prolongthe mood of hangover from the exceptional boom conditionsprevailing from the second half of the last decade.

As for New Year resolutions, one leading US truck industryanalyst (name and Wall Street address supplied) has vowednever again to dissociate the word boom from bust, howeverpersuasive the arguments. It’s possible that the test of thisresolution will come somewhat sooner than expected. Overthe last 12 months or so, prices for oil and money havedropped sharply. At the end of last August, spot market pricesfor crude oil were 23 percent lower than they were a yearearlier, and they’ve since dropped further (see chart Fuel 1).At 1.75 percent currently, interest rates in America have beenswiftly cut to their lowest level for 40 years. In addition,government spending is now steaming ahead.

Although no-one can be precise about the timing, bigchanges in oil prices, interest rates and public spending take

something in the span of 12-18 months to have their fullmacro-economic effects. If you desperately wanted to stokeup an industrial world economic and financial markets boom,you would have done exactly as above in America, particu-larly since last August. You would have stepped on theeconomic accelerator by cutting interest rates, raising publicspending and doing everything possible to drive oil pricesdown. If a serious boom is indeed now being fed into themacro-economic pipeline, will business memories stand up towhat might follow after it emerges?

Meanwhile, back in the present, have falling crude oil pricesfed through to the trucking industry’s fuel costs? The shortanswer is Yes (see chart Fuel 2) but fuel is a burning topic (nopun intended) accounting for 15-20 percent of the total workinglife cost of operating a typical heavy truck in Europe.

The accompanying chart Fuel 3 shows ex-tax prices(converted to Eurocents) paid by customers for diesel inAmerica, Japan and Europe. There have been substantial fallssince Q4 2000. Note also that ex-tax (and excluding Japanwhere the energy business is a law unto itself) these data showthat the oil companies have been delivering diesel to customersin Europe and America at prices close to the equivalent of 30Eurocents a litre. In other words, there’s a reasonably levelplaying field in the transatlantic zone, ex-tax. However, add intaxes and the fuel-price playing field is stretched and tilted.

The accompanying chart Fuel 4 shows diesel prices(converted to Eurocents) with taxes, ie the real playing field asfar as consumers are concerned. In the EuroZone, taxes typi-cally account for more than half of the forecourt price ofdiesel. The impact of a big fall in crude oil prices is bluntedunless the tax-take falls proportionately, which it doesn’t. Theextreme case is the UK where the tax-take on diesel is 70

FUEL 2 end user diesel price changesmonthly average price per litre automotive diesel in local currencies %changes

Oct 2001 vs Oct 2000

TOTAL* ExTax* Tax Take*

%change %change %total

UNITED STATES -18 -24 33

FRANCE -12 -27 57

ITALY -11 -22 54

CANADA -11 -12 34

GERMANY - 8 -24 58

SPAIN - 7 -12 46

UNITED KINGDOM - 7 - 8 70

JAPAN - 2 - 4 42

*TOTAL means price incl taxes. ExTax means price excl taxes. Tax Take is taxes as %TOTAL

at Oct 2001

Truck business - the burning topic* by Michael Hinks-Edwards

15

20

25

30

35

Aug-99 Aug-00 Aug-01 Aug-02

FUEL 1 crude oil priceslefthand scale line graph = spot oil price monthly close (USD/bbl Brent) thru 11-01

September 11

before after

January/February 2002 World Commercial Vehicles

DATA ANALYSIS23

percent (rising to 77 percent for gasoline/petrol). Because ofthis taxation element, a truck driver buying diesel fuel in theUK will pay up to 50 percent more in Eurocents than a coun-terpart in mainland Europe. In fact, taxes on fuel in the UKhave been cut recently in response to public protest, but youhave to look hard to spot the difference (chart Fuel 5). TheEuroZone’s introduction of Euro notes and coins this month,and the widespread adoption of the Euro for everyday transac-tions will mean price transparency across the continent. Will italso mean more public protest over fuel price differentials inthe supposedly single market?

Automotive fuel prices in America have long been regardedas absurdly low by almost everyone except the Americans.Although the tax-take on diesel in the USA amounts to 33percent, the total price is low, currently ~36 US cents a litre(versus the USD equivalent of an average 65 cents in theEuroZone, 71 cents in Japan and 95 cents in the UK). Similarinternational price differentials apply to gasoline/petrol.American politicians are usually among the first to explain tothe rest of the world that there are two things which will neverget majority approval from voters in the US. One is abandon-ment of the right to carry guns. The other is highertaxes/prices for gasoline and diesel. For the record, gun salesin America have increased since the terrorist attacks ofSeptember 11 last year, while gasoline and diesel prices aredown and the popularity of the president is sky-high.

Truck OEMs concerned to inject more service-minded atti-tudes into their product-focused organisations found the slogan"the customer is king" useful in their exhortations. In terms ofthe business bargaining power models used by managementconsultants, the truck customer has been enjoying some of thetrappings of royalty for some time. Judging from the lamentsof the OEMs, there have been some very good price/buybackdeals on new and used trucks in recent years. And last year,fuel prices came down. Enjoy it while it lasts?* Spot oil price data are from the US Energy InformationAdministration. Automotive fuel price data are from theParis-based International Energy Agency’s Monthly FuelPrice Surveys. Both sets of data are publicly available. Notethat IEA gasoline and automotive diesel price data aresupplied by member state governments and are monthlynationwide averages excluding VAT and any other tax rebateswhere they are refundable. These exclusions are made inorder to determine the "real" end-user price/cost. Note alsothat end-users of gasoline and automotive diesel may notnecessarily be using the fuels for motor vehicle transporta-tion. Currency conversion rates are from Bank of England andEuropean Central Bank.

0.20

0.30

0.40

0.50

0.60

Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02

FUEL 3 end user diesel prices excluding taxmonthly average price per litre automotive diesel in Euros thru 10-01

JAPAN

ITALY SPAINUK GERMANYUSA FRANCE

FUEL 4 end user diesel prices including taxmonthly average price per litre automotive diesel in Euros thru 10-01

0.20

0.40

0.60

0.80

1.00

1.20


JAPANITALY GERMANYFRANCESPAIN

UK

USA

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80


FUEL 5 end user diesel prices UKmonthly average price per litre automotive diesel in local currency (pence) thru 10-01

TOTAL

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