Foton Switch to Cummins: Wechai Model Challenges


On June 7th, Cummins ISG heavy-duty engines were mass-produced at the Changping Foton Automobile Factory in Beijing. The giant commercial vehicle that has emerged from Zhucheng, Shandong, finally got rid of decades of heavy anxiety on heavy engines.

According to Weifang’s announcement, except for Shaanqi and Beiben, Foton has been the third largest customer of Weichai Heavy Duty Truck Engines, with a matching ratio of around 80%. This directly leads to a higher degree of homogeneity of the company's heavy truck products and market competition products, and poor product profitability.

According to Foton Motor's 2013 financial report, last year, Futian sales of heavy trucks reached 127,000 units, an increase of 33% year-on-year, well above the industry's 15% growth rate. However, the annual profit of Foton Daimler was only 40 million yuan, far lower than capital. The market is expected to have 200 million yuan.

In order to solve the supporting problem of the core engine, Foton started to contact Daimler in 2003. He wanted to obtain large-displacement engine technology through the establishment of a joint venture company, but in the end, Cummins solved the problem of Wang Jinyu, general manager of Foton Motor. .

Daimler project <br> <br> If there is a change in accordance with the original plan, this year invested more than 1 billion yuan Foton Daimler engine plant will be completed and put into production, but now the original introduction of the Mercedes - Benz OM457 engine, It became the Cummins ISG series, and the production site was changed from Huairou to Changping.

"The most likely reason is that Daimler is not willing to take the engine technology to Fukuda," said an industry source who declined to be named.

According to the contents of the open cooperation between the two parties in 2012, Foton Daimler Motors, with a registered capital of RMB 5.6 billion, has an investment of 9.905 billion yuan, and the ratio of the two parties is 50:50. The company mainly produces "Fukuda Auman" brand medium and heavy truck products, and The Daimler licensed emission standards and power to reach the Euro V and 490 horsepower OM457 heavy truck engines. The total vehicle production capacity is 200,000 vehicles/year, and the engine production capacity is 45,000 units/year.

The two sides agreed that the future Auman Heavy Trucks produced by Foton Daimler will be fitted with OM457 engines. Foton will provide products. Daimler will provide technical and expert support to help the joint ventures improve product quality and assist in the development of new products for the domestic market. To enhance the competitiveness of Auman Heavy Trucks in China and emerging markets.

“A possible variable is that due to the limited production scale of Auman heavy trucks, Daimler’s OM457 engine has a higher cost. If it is provided solely for Auman, it will be difficult to see the return on investment; if it is sold abroad, it will be difficult to raise the high price. To form a market, so under the trade-offs, Cummins, who has already opened up a market in the Chinese market, is considered a compromise. "The above-mentioned industry sources said.

Currently, Cummins is the largest foreign investor in the Chinese engine industry and owns eight joint venture and wholly-owned manufacturing companies. In 2008, Foton Motors and the United States Cummins set up a 50:50 joint venture company, the two sides have been focusing on the production of ISF light engines, supporting the Foton high-end light trucks.

At this time, Foton Motor has basically completed the layout of light diesel engines for commercial vehicles. High-end machines are mainly produced by the Foton Cummins Joint Venture, and mid-range engines and low-end diesel engines are manufactured by Futian Engine Works and Foton Lovol Power Company. However, in the heavy-duty engine field, Futian has been a blank.

According to the production and sales data of China Automobile Association, the sales of Foton trucks are currently ranked fourth after Dongfeng, China National Heavy Duty Truck and FAW's liberation. If Auman GTL's new heavy trucks want to further breakthrough in sales, they must have a product that rivals the Dongfeng DCT11, the Heavy Duty Truck-Man D20/D26 and the Liberated Aowei 11L engines. Cummins, who has always attached importance to strategic alliances, has solved the pressing need for Fukuda.

According to the person in charge of Cummins (China), ISG series engines are brought together by Cummins global research and development resources, developed in the United States headquarters, Futian cars from the vehicle support, application and other aspects to provide support. In the future, ISG and Dongfeng Cummins ISL (9.5L), ISZ (13L), and Xi'an Cummins ISM (11L) will jointly form the Cummins China product family series and will be sold globally.

According to the plan, this time Foton will invest two billion yuan in cooperation with Cummins and Foton Daimler to manufacture ISG engines at manufacturing sites in Brazil and China, with an annual production capacity of 60,000 units. This means that the future Foton Cummins engine will digest production capacity in two markets, half in China and half in overseas.

Cummins Weichai copy posterior <br> <br> Fukuda by Cummins has its own heavy-duty powertrain, which means heavy truck market sales of the top five car companies, has its own powertrain package, this is Wei Chai does not want to see the situation.

According to the Weichai Power's 2013 financial report, Foton Daimler Motors was the largest customer of Weichai last year, contributing an order of 6.708 billion yuan, accounting for 11.5% of its total sales. Now, like the customers who lost heavy gas, FAW, they were losing Foton. The root cause of this huge change is the “golden industrial chain” strategy created by Weichai.

In 2007, Weichai successfully absorbed the merger of Hunan Torch Automotive Group Co., Ltd., and has three business segments: powertrain, commercial vehicle, and auto parts. The only domestic company that includes the engine (base) and transmission (Fast) The most complete heavy-duty truck industry chain, including Axle, Hande, and Commercial Vehicles (Shaanxi Zhongqi), has also made the original heavy truck customers alert.

“Especially after Weichai purchased Shaan Heavy Gas, the heavy truck companies had to feel bad about WeiChai. After all, it had its own vehicle factory. In this sense, Weichai is both a partner and a competitor.” said industry insiders said. At the same time as almost all heavy truck companies cooperate with Weichai, they will worry that they will be surpassed by Shaanxi Steam in the future.

Thus, as if invariably, Dongfeng had Dongfeng Cummins and Dongfeng Commercial Vehicle engine plant supporting; FAW liberated FAW Xichai and FAW Dachai supporting; China Heavy Duty Truck solved the engine problem through joint venture with Man; Fukuda also introduced after many years of negotiations. Cummins. Weichai's market share has gradually declined. The data shows that in 2010, Weichai had a market share of 40% in the heavy truck engine supporting field, and by 2013, this figure had dropped to 36.2%.

Although in a period of time, due to the strong demand for medium-to-low-end products in the domestic heavy-duty truck market, Weichai still has an absolute advantage in the heavy-duty engine supporting field, but as the emission standards become stricter and the demand for heavy-duty truck products is upgraded, the future The future of Chai’s development is not clear.

“In fact, Fukuda and Cummins’s hand-to-hand relationship reflects the competition of truck manufacturers for the next-generation powertrain. According to industry analysts, the next-generation powertrain is mainly based on 12L and 13L engines, while the domestic engine manufacturing level Also stay below 11L, so domestic heavy truck companies have also completed the power upgrade through joint ventures. In this sense, Weichai's upward development momentum is not sufficient.

In fact, Cummins is the target of most copying. This nearly 100-year-old American advanced power equipment manufacturer has never thought of owning truck products through merger and acquisition vehicle companies. Instead, it only continuously upgrades its products and technology, and continues to build auto factories through joint ventures and cooperation. Develop yourself as a solid partner. For component manufacturers, focus is more conducive to self-development than integration.


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