Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.uberflip.com/i/426899
56 COMMERCIAL CARRIER JOURNAL | DECEMBER 2014 EQUIPMENT: LOW-TECH TRUCKS already are building and selling dependable, simpler low- cost trucks for emerging markets around the world, such as China, India and Russia. "They already know how to build these vehicles," he says. "Many component manufacturers are doing the same thing." Kar cites Hendrickson's 27-ton rubber truck suspension developed for the company's China market. "It's a durable, cheaper design, and they've discovered that it's capable of handling a 40-ton payload just fine." Hendrickson now is bringing the suspension to North America. "They'll sell the same product engineered for the developing world here for a higher margin," he says. "It's a win-win-win for them." A simpler ride Another medium-duty prediction made by Kar a few years back has become reality: Truck assemblers are taking U.S.-compliant components from around the world and assembling a simpler, durable low-cost model for the North American market. Seattle-based Rainier Truck and Chassis became the first outside component assembler to begin marketing its line of Class 4-7 cabover models in North America. Gary Jones, Rainier's chief executive officer, says feedback obtained dur- ing the due diligence phase of the company's launch con- vinced him that dealers, fleets and drivers are "fed up" with today's complicated vehicle technology. "Routine maintenance is one thing, but it takes an IT wiz- ard to chase down defective programming modules today, all while a truck is sitting idle and not earning any revenue," Jones says. "Based on this feedback, we saw an opportu- nity to fill a void by offering customers a reliable low-tech intelligently-designed COE platform." Rainier uses proven components to build what Jones calls a "brand-new old-school truck" with simplicity and durabil- ity as defining design principles. "We're using components every fleet manager is familiar with," he says, citing Cum- mins engines and Allison transmissions as examples. But Rainier keeps the programming in those components as simple as possible to make maintenance and repairs just as uncomplicated. "We're not concerned with bells and whistles," Jones says. "I'm not interested in an electrical system to softly turn off a dome light. The light can either be on, or off, if the cab door is closed. If the bulb goes out, someone can figure that out without a dash light telling them and quickly replace it." Long-haul limits Jones and Rainier may be first out of the box with a market- able low-tech truck, but Kar thinks other offshore manufac- turers soon may test the waters in the North American mar- ket. While that may be good news for medium-duty fleets looking for alternatives to high-tech rigs, Kar doesn't think long-haul fleets can expect any new options anytime soon. "Because of the specific role long-haul fleets play in the North American market, it is far more likely that any low-tech push in Class 8 will be limited to municipal and vocational applications," he says. For many medium-duty fleets, low-cost low-tech trucks may prove irresistible, but Kar says that appeal will not trans- late well into other Class 8 applications – especially those with resale concerns. "If a medium-duty fleet can purchase a new Class 5 or 6 truck for 20 to 25 percent less than a standard vehicle today, there are some applications where they will be able to run those vehicles into the ground over a four- or five-year peri- od and walk away," he says. "Even without a second life from the trucks, that fleet will have made money. It's a good deal for the fleet, and it's also a good deal for the manufacturer, which gets to sell even more trucks over that period of time." Even worse for long-haul fleets, Kar predicts that Class 8 new truck prices will increase by at least another $10,000 to $15,000 by 2020. However, he thinks fleets will absorb these costs easily because those future tractor designs will be more fuel-efficient than current ones. "It all boils down to the economy, really," he says. "If the economy is good, high-tech trucks will soon deliver higher values that will be absorbed by fleets, assuming margins are better than they are today." But if the economy remains flat or turns down, Kar says all bets are off, and lower-tech lower-priced trucks eventually may find their way into future long-haul designs. "If fleet margins don't change, then the market will have to shift," he says. "OEMs will have start asking themselves hard questions, because at the end of the day, they want to sell trucks. If no one can afford a new truck because it is packed with a suite of high-technology components, then they will have to respond to those market demands. If they do not, I guarantee other offshore manufacturers will." Sandeep Kar, global director of commercial vehicle research for industry analysts Frost & Sullivan, predicts that Class 8 new truck prices will increase by at least another $10,000 to $15,000 by 2020.