Will the Volkswagen debacle have any Implications for Trucking?

In his monthly review of global news for local truckers, FRANK BEETON details the story of Volkswagen’s “defeat device” thus far, and asks if there will be any implications for the company’s truck operations; reports on a somewhat surprising new trucking alliance between General Motors and Navistar; looks at two “new-technology” truck operations; and reports on an interesting new Mercedes-Benz truck from Brazil.

The one motor industry news story that has dominated international media, since it first broke in September, has been Volkswagen (VW) Aktiengesellschaft’s admission to the California Air Resources Board (CARB) and the United States (US) Environmental Protection Agency (EPA) that it had deliberately installed software in some of its diesel-engine products that was intended to covertly defeat laboratory emissions testing procedures.

In essence, the “defeat device” was capable of identifying a test situation, and was then able to restrict engine torque and vehicle performance to the benefit of emission levels. Once the vehicle exited the test situation, full power and performance would then be restored. While this would also be to the benefit of fuel consumption, emission levels would rise to a point well in excess of legislated limits.

Management Implications

These revelations had enormous ramifications for the VW Group’s top management structure. The first, and most spectacular casualty, was chief executive Martin Winterkorn, who announced his resignation from the position on September 23.

Winterkorn’s departure was followed by the suspension of VW’s head of brand development, the research and development chiefs at subsidiary brands Audi and Porsche, and VW’s top executive in the US. Porsche chief executive Matthias Müller was then named as Winterkorn’s successor.

The non-compliance with legislated parameters would also have direct financial implications for VW, with penalties of up to $US 18 billion (R248,7 billion) expected to be imposed by the EPA alone. This organisation had issued a notice of violation of the Clean Air Act to the VW Group on September 18. The “defeat device” had also enabled VW to claim green car subsidies and tax exemptions in the US.

The countermeasures subsequently implemented by VW included an internal enquiry, presumably to establish just who had made the decision to use the “defeat device”, the recall of 500 000 cars in the US alone for correction, the provision of €6,5 billion
(R89,8 billion) to cover potential costs (the company has subsequently said that much more may be needed) and a substantial corporate structural reorganisation.

Volkswagen announced that 11-million vehicles globally had been equipped with the affected two-litre EA 189 engine, including 1,8-million commercial vehicles, which, according to media reports, were T5 Transporters.

Although there appears to have been no direct product-related implications for heavier commercial vehicles, the sheer magnitude of the issue and it’s as-yet-unknown final costs, have prompted observers to speculate on drastic measures that VW may have to take to fulfil the legal and moral obligations flowing from these revelations.

The Truck and Bus Organisation

Earlier this year, we detailed the formation of “VW Truck and Bus GmbH” as the holding division for the group’s commercial vehicle brands, which include MAN; its subsidiary operations in Brazil and India; its joint venture with China National Heavy Duty Truck Corporation (CNHTC); and Scania.

The question has been asked whether VW would consider scaling down the 12-brand empire that it has accumulated in recent years in pursuance of its quest to the global Number One motor manufacturer.

Names like Bugatti, Lamborghini and Ducati have come under this particular spotlight, as they are not considered core to VW in terms of enhancing the bottom line. There have also been questions around Skoda and Seat, which are perceived to occupy some common ground in the European market for value cars.

However, the Truck and Bus operation does present problems and opportunities. The finalisation of the group structure is far too recent to have yet fully achieved any meaningful rationalisation benefits.

Scania and MAN have an adversarial history, and working together is a new experience for them, with pains having been taken not to soften the edges of their individual status as premium truck builders.

This grouping has massive potential, but much work remains to be done in reducing market coverage overlap in both geographic and product-related terms. Should the parent company find itself compromised financially, there is a danger that sufficient funds may not be available to optimise the Truck & Bus structure. This situation will demand close scrutiny by commentators and observers going forward.

NAVISTAR AND GENERAL MOTORS TEAM UP

In August we reported on the re-establishment of North American trucking cooperation between General Motors and Isuzu Motors Limited. The latest agreement will see vehicles based on Isuzu’s N-Series “low cab forward” light trucks appear in Chevrolet-branded guise in 2016.

This new venture revives an earlier arrangement that was terminated in 2009, and promises to substantially boost the volume of Isuzu-sourced trucks being sold in the hugely important North American market.

The major points of departure, between the new arrangement and its predecessor, are that the trucks will be assembled by Spartan Motors in Charlotte, Michigan, and not in the General Motors plants, and that GM will not be adding its own conventional cab (bonneted) medium truck products into the mix.

Filling an Important Gap

This latter point is an important difference in a market that is still largely wedded to the conventional cab configuration, and, if not addressed, would place a limit on the total number of vehicles that could be sold. It is understandable, therefore, that GM would seek a way to address this shortfall, so the subsequent announcement, at the end of September, that the giant manufacturer had engaged with Navistar International Corporation in a cooperative venture was logical, if not somewhat surprising.

This long-term agreement covers the development and assembly of conventional cab Class 4/5 commercial vehicles (roughly 6,4 to 8,9 t gross vehicle mass (GVM) ratings) which will, like the Isuzu trucks, be sold with Chevrolet branding. However, these units will only enter the market in 2018, some two years after the forward-control (cab-over) Isuzu-based Chevrolets.

The joint-venture vehicles will be built by Navistar at its Springfield, Ohio, facility, which is to gain an investment of $US 12 million (R165,8 million) and 300 additional jobs as a result of this arrangement. According to the announcement, Navistar will provide rolling chassis expertise, while GM will contribute commercial components and engines.

There is no detail available yet on powertrain options, but we would assume that both petrol and diesel variants will be available in these medium trucks, considering that GM does make both power choices available in its larger pickup models.

Navistar to Rebrand its Products

A subsequent news report from Philadelphia also states that Navistar International plans to rebrand its truck line-up, starting in 2016. Names such as TranStar, PayStar, ProStar, WorkStar, TerraStar and DuraStar are to be replaced by an alphanumeric designation system consisting of two letters and three numbers. The numeric code will indicate whether the model has a long or short bonnet, and confirm the positioning of the front axle.

The first new model range, designated HX, is to be unveiled in February 2016, and will replace the PayStar. This is to be followed by the LT series, which will replace the current ProStar later in the year.

The joint-venture product to be marketed by General Motors will follow a similar designation pattern, using the prefix CV, and will also feature some unique differentiated styling.

Is GM Following Ford’s Lead?

This question relates, of course, to renewed interest in the truck business. We have devoted considerable space recently to some global indications that Ford is moving progressively back into a business area it largely vacated in the 1980s and 1990s.

GM has also moved out of anything heavier than large pickups since the disposal of its own heavier-truck assets to Volvo in 1996, and the aforementioned disengagement with Isuzu in 2009.

If GM does, indeed, have a renewed interest in trucks, it is following a radically different path to its great American rival, which is bringing much of its truck manufacturing activity back in-house.

It seems that GM has elected to rather play the merchandising role to two well-established stand-alone truck manufacturers, bringing some of its own drivetrain componentry and, more importantly, its vast North American distribution network to the party.

NEW TECHNOLOGIES ENTER THE TRUCKING ARENA

The proposition that new vehicle technologies fit well with city bus operation makes a great deal of sense, given that those vehicles remain constantly on fixed routes and are never far from refuelling/recharging facilities or technical support.

One obvious outtake of this scenario has been the growing global interest in all-electric buses, using a number of alternative current collection or battery recharging solutions, as this transport mode brings the seemingly utopian combination of zero emissions, almost silent running and smooth operation to the urban environment where it is most appreciated.

It was notable that inner-city operations progressed rather quickly from an initial flirtation with hybrid applications, which still require interventions from noisy and polluting internal combustion engines once the battery power runs out.

Plug-In Hybrids in Shanghai

Just recently, news of two trucking operations has emerged, in operational environments where the same favourable conditions apply. The Port of Shanghai, in China, has adopted plug-in hybrid electric technology for its dock spotters; these being truck tractors that work exclusively in the harbour area, relocating shipping containers and crates in continuous shift work lasting up to 22-hours a day.

The vehicles are the joint products of local truck manufacturer Shaanxi Automotive, and technology provider Efficient Drivetrains, Inc. of Milpitas, California, and are capable of operating at an all-up mass of 45 t.

Chinese cities are well-known for their high levels of air pollution, and the deployment of these vehicles will cut out the noise and emissions associated with conventional diesel trucks, which spend much of the time with engines idling. It will also allow their drivers to use electronically powered air-conditioning and heating systems while their engines are shut down.

Driverless Trucks in Singapore

Meanwhile, in Singapore another new vehicle technology is to be tested in the city-state’s ports. We have read much debate recently about autonomous, or driverless vehicles, with the main point of discussion being when, and not if, this technology could be more widely used.

The only sticking points seem to be the potential interaction between autonomous vehicles and those still being driven by people, the interface between driverless vehicles and the less-than-perfect infrastructure that they will depend on for safe operation, as well as the associated safety and liability issues.

Singapore’s proposal, once again, involves specialist vehicles moving containers between port terminals, and is based on a concept where one truck, driven by a human, would be “shadowed” by a “platoon” of three or four driverless vehicles. In the controlled environment of Singapore’s ports, the authorities will be able to ensure that the operational environment remains pristine.

NEW MERCEDES-BENZ TRUCKS FOR BRAZIL

The importance of the Brazilian market, and those of its neighbouring Latin American nations, can be gauged by the fact that global truck and bus manufacturers are quite prepared to develop unique products specifically for manufacture and sale in that region.

The Brazilian market, for commercial vehicles over 3,5 t GVM, is usually worth around 150 000 units per annum, although the current economic woes besetting the world’s emerging economies are likely to cap truck sales at around only 75 000 units in 2015.

However, the past and future volume potential of the region has led to the emergence of such unique product ranges as the VW Delivery, Worker, Constellation and Volksbus lineu-ps; Ford’s Brazilian Cargo; Volvo’s VM series; and Mercedes-Benz’s Accelo and Atron families.

The Atron is particularly intriguing, in that it is a modern successor to generations of semi-forward control Mercedes-Benz trucks that were particularly successful in establishing and consolidating the brand as a leading truck supplier in South Africa during the 1950s, 60s and 70s.

However, the €500-million (R7,55-billion) Brazilian product offensive, which was recently launched by Mercedes-Benz trucks to stimulate sales during difficult economic conditions, is focused on the locally produced full forward-control Accelo, Atego and Axor ranges.

This action is particularly important to Mercedes-Benz as it views Brazil as its major global market for commercial vehicles, with 32 200 of its trucks and 13 600 of its buses having been sold there in 2014.

Accelo Range Expanded

The Accelo range is a unique Brazilian cruiserweight line-up of forward-control trucks optimised for urban distribution applications. Until now, it has been made up of the 8 300 kg GVM Accelo 815, and 9 600 kg GVM, Accelo 1016 models. Both of these are powered by the Mercedes-Benz OM924 LA four-cylinder, in-line, turbo-intercooled diesel engine, which develops 115 kW (156 hp).

It drives through an Eaton FSO 4505 five-speed synchromesh transmission, to a Mercedes-Benz HL-2 hypoid single-reduction rear axle. The heavier 1016 model has an additional option in the form of the manufacturers’ own MB G 56-6 six-speed synchromesh gearbox.

Late in October, it was announced that this range was being extended to include a three-axle, 6×2 model designated Accelo 1316. Developed from the 1016 model, with the addition of a Suspensys-manufactured liftable third axle, this derivative has a GVM rating of 13 t.

This enables a body and payload capacity of slightly more than 8,5 t, and the 1316 is available with wheelbase dimensions of 3 700 or 4 400 mm for body lengths of up to eight metres.

Claimed competitive benefits for the 1316 include a low platform height for ease of loading, and a tighter turning circle than competitive models. The powertrain specification retains the OM924 engine used in the 1016, rated at 115 kW with 610 Nm of torque, while the MB G-56 six-speed transmission is standard on this model.

The tandem-axle rear bogie has a total imposed load capacity of ten tonnes, and the full-air anti-lock braking system (ABS) works through drum brakes at all six wheel positions.

Brazilian Trucks to Go Global?

The extensive use of bought-in components is typical of the Brazilian truck manufacturing industry, and it is notable that even Mercedes-Benz, with its global policy of extensively using in-house componentry, has procured some outsourced aggregates for this vehicle.

Brazilian-sourced vehicles – with the notable exception of VW’s Constellation and Volksbus models sold in South Africa, and a number of heavy-duty bus chassis sourced in that country by European premium bus manufacturers – have not made a significant impact on the global market outside of South America up to now.

However, with the recent steep fall in the exchange value of the Brazilian real, and the drop in domestic sales volume in Latin American markets, increased movement of Brazilian-sourced vehicles into a broader global market may be a prospect for future consideration.

Global FOCUS is a monthly update of international news relating to the commercial vehicle industry. It is compiled exclusively for FOCUS by Frank Beeton of Econometrix.