Is Caterpillar’s truck engine business finished?

If Caterpillar had simply left the heavy truck engine business in 2010, it could be said that the company showed great foresight.

Emissions targets for on-highway diesels had become progressively more difficult and expensive to achieve and the proportion of vendor engines in global heavy trucks had shrunk markedly.

Big players in the US market – Mercedes-Benz/Freightliner, Volvo/Mack and Kenworth/Peterbilt – had progressively specified their in-house engines, rather than engines from vendor suppliers Cummins and Caterpillar. And Detroit Diesel, once a major engine supplier to most US truck brands, had become Daimler-owned.

On top of that, Caterpillar’s on-highway truck engine business had never accounted for more than 10 per cent of Cat’s income.

Following months of speculation, Caterpillar announced in June 2008 that it would leave the heavy-duty on-highway truck-engine business by 2010, before the next round of US EPA (Environment Protection Agency) emissions legislation kicked in.

However, on the same day, Caterpillar and Navistar announced that they had signed a non-binding memorandum of understanding to pursue a global truck business.

"The combination of Navistar’s truck design, development and manufacturing expertise and Caterpillar’s unparalleled worldwide distribution creates a significant advantage for global customers through the ability to offer the right vehicle for the right application through more than 4700 points of distribution around the world," said Dee Kapur, president, Navistar Truck Group.

"The North American Caterpillar distribution system provides expanded reach for severe-service trucks with big-bore power: a segment where Navistar has traditionally not been as focused.”

Interestingly, Caterpillar had already tried to comply with the 2010 US EPA emissions targets, using optimised versions of its ACERT (Advanced Combustion Emissions Reduction Technology) engines, without the use of SCR (Selective Catalytic Reduction) urea injection. Obviously, they failed and Cat paid a fine for very non-compliant engine it sold.

In parallel, Navistar insisted that its 2010 engines would comply with EPA legislation, without the use of SCR.

Navistar and Caterpillar were singing from the same hymn book and envisaged a new joint truck business. Oddly, though, Caterpillar – one of the USA’s premier diesel engine makers – embarked on a joint venture, NC2 LLC (‘NC-squared’ as it became known) that would use Navistar, not Cat, engines.

It’s not clear who did the ‘due diligence’ exercise at Caterpillar, but it turned out that the Navistar engines had no chance of EPA 2010 compliance, without resorting to SCR and one of our US-journo colleagues lost his magazine editor’s job for saying so.

The NC2 joint venture was built on a false premise.

On top of that, the Navistar-Cat alliance automatically cancelled out a long-standing agreement between International Trucks Australia – then owned by Iveco – and Navistar, to import bonneted prime movers for the Aussie market, so there was no love lost between Iveco and Navistar.

In Australia, NC2 was launched with much hype at Uluru in 2010 and we journos got to drive the trucks not long after. Because Australian emissions laws were still at US 2004 levels, the launch vehicles were powered by Cat ACERT C-13 and C-15 engines, with unspecified emissions treatment components.

The Australian assembly line was an adjunct to Caterpillar’s Tullamarine (Melbourne) complex and was running flat-out assembling the new Cat trucks through 2010, because tighter Australian emissions laws were due in December 2010.

The aim was to produce around 500 2010-plated trucks and sell them before the supposedly-compliant Navistar engines arrived in 2013.

The first Navistar engine to be inserted into a Cat Truck was the company’s MaxxForce 12.4-litre. This engine had been developed for Navistar by MAN and would have easily complied with US EPA 2010 emissions requirements, had it been fitted with SCR.

However, Navistar stubbornly refused to equip it with SCR and the engine earned a reputation for unreliability, with subsequent legal action by North American owners. In January 2020 Navistar finally agreed to US$135 million in payoffs to claimants.

Interestingly, the Australian Cat Trucks lineup was different from the US-market product. Ours was based on the new streamlined Navistar cab that is now being sold by Iveco, but the Yank Cat Trucks had the old Navistar Paystar 5600 cab with a flat-fronted bonnet.

I drove the Australian-market NC2 C-13 and C-15 powered Cat trucks in November 2010 and found them to be very competitive with mainstream bonneted trucks and a great improvement over the old 9000 Inters that had gone before.

I didn’t bother with a test of the MaxxForce-powered 2013 model, because the writing for NC2 was on the dunny wall by then. Caterpillar had obviously lost interest in NC2 and the Australian arm of the joint venture was restructured as Navistar Auspac.

In 2015 Caterpillar announced that it would end the joint venture with Navistar in the US and start building its own trucks from its plant in Victoria, Texas.

Caterpillar’s director of the Global On-Highway Truck Group, Chris Chadwick, said the on-highway vocational truck product family was important to its product line in the US.

“Customers like our trucks and want to include them in their fleets in a variety of heavy duty applications such as dump trucks, mixers, haulers or one of the other configurations we offer,” Chadwick said.

“To continue to provide the best solution for our customers, we will bring the design and manufacturing of this product into Caterpillar, and the production specifically to the Victoria, Texas plant.

“Our updated strategy reaffirms our commitment to grow and develop our presence in the vocational truck industry moving forward.”

Less than a year later, on February 26, 2016, Caterpillar announced it would not produce any of the planned new on-highway vocational trucks.

Ramin Younessi, then vice-president of Caterpillar’s Industrial Power Systems Division and now a group president, had joined Cat in 2013 and obviously saw the folly of the proposed venture.

“Remaining a viable competitor in this market would require significant additional investment to develop and launch a complete portfolio of trucks, and, upon updated review, we determined there was not a sufficient market opportunity to justify the investment,” said Mr Younessi.

“We have not yet started truck production in Victoria and this decision allows us to exit this business before the transition occurs.”

Thus ended one of the most ridiculous chapters in truck industry history and neither Caterpillar nor Navistar scored any positives from the debacle.

Interestingly, if you scan the Caterpillar website archive, there’s not a single mention of Cat Trucks.

Although Caterpillar products had been sold in Australia since the early 1920s, it wasn’t until the mid-1970s that Cat’s truck engines made their mark Down Under. Most notable in my opinion were the 3208, 3406 series and C-15 and C-16.

In the 1960s, Ford in the USA had contracted Cat to provide mid-range engines. The 1100 Series powered 163,000 Ford trucks in the decade and firmly establishing Cat’s identity as a truck engine manufacturer.

In Australia, Ford launched the Louisville range in August 1975, following US sales of 34,510 Louis’ in 1974. The new Ford was designed for petrol and diesel V8 engines and by far the most popular Australian model was the 8000, powered by Cat’s 3208 V8 diesel, with 175hp or 210hp.

The 3208 put the Ford Louisville on the map and I can remember road-testing several Louis’ with Cat V8s under-bonnet. Matched with an Allison MT650 self-shifter the LNT8000 was a popular agitator truck.

The 3406A 14.6-litre diesel six was released in the mid-1970s as a mechanical-injection, turbocharged engine with pre-chamber cylinder heads. The next iteration was the 3406A PCTA, with after-cooling, followed by the 3406 DITA, with direct injection.

In the early 1980s the 3406B featured ATAAC, air-to-air after-cooling and, in 1986, came PEEC (Programmable Electronic Engine Control) in the 3406C.

Cat skipped the ‘D’ suffix and released the 3406E, full-authority, electronically-controlled engine for the 1990s. The 3406E was replaced by the C-15 in 1999 and the C-16 was a longer-stroke derivative.

Throughout its life the 3406 series was the preferred engine in many Australian line-haulers and road trains in the 1990s, and global sales over its life were almost 575,000 engines.

Until Cat abandoned the truck engine business, the C-15 and C-16 were in great demand in Australia. I have fond memories of a road train drive out of Alice Springs in November 2006, stirring the stick in a KW T904, behind a 625hp ACERT C-15.

Thanks for the memories Caterpillar…