New Truck Engine Costs To Rise $9,000-$10,000

[ATeam]

Diamler Trucks North America recently announced that it is raising new truck prices $9,000 to account for the increased costs of manufacturing engines that comply with 2010 emissions requirements. Volvo engines are rising about $10,000 for the same reason.

That is a lot of new money to put in a new truck that performs essentially the same amount of work. If you are going to increase your equipment costs by $9,000 to $10,000, you have two choices: (1) raise the price at which you will haul freight to pass your increased engine costs on to your customers, or (2) join the ranks of the working poor and essentially donate your truck to the customers you serve.

If you are running freight at breakeven rates or less, that is what you are doing, is it not? You are letting your customers use your truck to make money by moving their freight while you make none. It is little different than letting your neighbor use your truck for free as long as he or she replaces the fuel used.

In these recessionary times, it is going to be difficult for operators of new equipment to pass the increased engine costs on to their customers, but if the big fleets do not do so, they will not survive for long.

It is my hope that these significantly higher engine costs will put upward pressure on freight rates that will not only help big fleets recover their costs but also benefit people like us who are not running brand new equipment and have no immediate need to pay the extra $9,000 to $10,000 to do the same work we are doing now.

 

[moose]

One have to wonder if they announced so ,
to sell '09 inventory ,
or if the above prices will hold ground for next springs.

(might be of a spacial interest for TC...)

at any case , this is a good news for anyone , that don't need to buy a new truck soon ,
or is willing to take on the glider kit approach .
there are more then a few options in the market place today , for engine upgrades , so one can be in compliance .
around 7,000$ , installed.
heck , the industry leader , is located right here , in Bloomington Minnesota .
as in Europe , many more will show up , as 2014 come close.

 

[Slo-Ride]

All I can say is ,,,GLIDERS maybe the future

 

[greg334]

Just because the 2010 engines are going to cost more doesn't mean much.

We are not going to see a forced retrofitting of millions of trucks in the next few years with 2010 engines and with production of medium and heavy duty trucks down by 46% from last year, the likeness of an impact within the next two years is slim.

The trend now is to extend the life cycle of the truck beyond a million miles, irregardless of the financial impact through tax laws.

As for people telling the customer that they need more money, that is a very unrealistic approach to this business - especially when you are contracted to a company like FedEx who determines what they prices are to the customer - not you. They will be able to make the changes in their fleet because of their size and the volume that they are dealing with. Competitively speaking they will continue to squeeze the contractors in all areas of the business and in CC's case, if they can't find someone to cover it, they will just out source the work.

 

[ATeam]

at any case , this is a good news for anyone , that don't need to buy a new truck soon ,
or is willing to take on the glider kit approach .
there are more then a few options in the market place today , for engine upgrades , so one can be in compliance .
around 7,000$ , installed.
heck , the industry leader , is located right here , in Bloomington Minnesota .
as in Europe , many more will show up , as 2014 come close.

Just make sure that if you choose an approach, it is a CURRENT CARB-compliant approach. Many of the advertised options that are out there now are not CARB compliant or have yet to be CARB approved. For example, their are tier-2 and tier-three reefer emissions solutions are available out there, and at a significantly lower price than a tier-4 solution. But it takes a CARB-approved tier 4 solution to run a reefer in California under the new rules when they take effect.

 

[piper1]

At least this time the fuel economy will get better, the upcharge in engines will be regained (slowly in some cases) by the enhanced fuel economy that SCR engines (everyone except International) will deliver.

 

[TeamCaffee]

Not only will the new fuel mileage help you but the manufacturing innovations that have been put into the new DD motors should limit down time.

 

[highway star]

Have you heard what the procedure is for changing the fuel filters on the DD15? It's crazy!

 

[moose]

As for people telling the customer that they need more money, that is a very unrealistic approach to this business - .

this will not lead to an increase in rates , not even in the long run.
but ,
it will thin the herd !.
nothing will change in the market place ,
if you can run the freight for less , then your competition (those with the new expensive engines) , then the freight will be on your truck.

 

[ATeam]

Not only will the new fuel mileage help you but the manufacturing innovations that have been put into the new DD motors should limit down time.

Results vary from truck to truck, of course, but regarding engine down time, I think Volvo is already in a good spot. In three years and 400,000 miles, we have had only one down-time incident owing to our Volvo engine. It took us out for a time while the repair was made. No tow was required. Otherwise, all engine work has happened during scheduled maintenance.

I don't see the additional costs of 2010 engines doing anything to improve Volvo engine down time rates. The rates are already good, at least in our case.

When talking about the costs and benefits of the new engines, let's not forget the added maintenance costs SCR technology brings. When all is said and done, these new engines are going to be more expensive to run, not less.

How much fuel do you have to save to make up $10,000 price, plus the cost of the DPF fluid (uretha), plus the cost of maintaining the filters, etc? I don't know the fuel filter change procedure highway star refers to. If it is more difficult and expensive to do, those kind of costs must also be factored into the costs of running a 2010 engine.

Highway Star, can you tell us more about the fuel filter issue? Will a driver be able to change the fuel filter himself or herself? For us winter state types, it is an important question.

EDIT: I originally wrote above, "It took us out for a day while the repair was made." The word "day" has been changed to "time." I woke up this morning remembering the down-time incident better than I did when I first wrote of it above. There has been only one down-time incident, and it took only one day to repair, but the engine failure took us out for four days, not one.

While it took just one day for the repair to be made, the truck broke down on Sunday (day one), was diagnosed on Monday when the dealership opened, (day two), not touched on Tuesday because the part did not arrive as scheduled (they did not use FedEx...Grrrr), and finally repaired on Wednesday (day four). So, it is one down time incident attributable to the engine and four days to get back on the road.

I apologize for originally misstating the length of the down time. It was an error in memory that was corrected by reading the blog entries I posted about this, day by day as events developed. That's part of why I blog...so Diane and I can remember what really happened out here instead of what gets remembered well after the fact.

Memory errors like this are how the good old days become the good old days. Four days of down time become one. The pain of unpleasant events tends to get put out of one's mind and the joys tend to be remembered. A personal blog or daily journal helps us remember the whole story, not just the parts we like to remember. So too with EO posts. They create a present day record of what's up now, so future claims that these days are the good old days can be examined under the light of posts from these days.

 

[greg334]

Moose, I think you are right.

Highway I heard that too, I also heard that it may come down to only qualified service personal changing the filters - all but eliminating the home grown I do my own maintenance owners.

who knows?

The increase in fuel economy is not written in stone and from the folks down the street they are clear that even though they get 5 to 7% increase, they have also gotten 7 to10% decrease in some testing. They are using 5% for a specific reason that wasn't really clear. They were clear that the truck has to be carefully planned, not haphazardly put together.

I think that it will be more like 3 to 5% but like Phil mentioned, $10,000 - how long will it actually take to pay back.

lets see..... 10 mpg base

5% increase = .5 mpg

10.5 mpg

fuel is say $3 a gallon

Maybe I am figuring this wrong but 10k gives you 3333.3 gallons, and at 10.5 mpg, that is 35,000 miles - well within the first year.

For the rich expediter, an extra 10k is nothing, they don't have to have the polished lift gate or them fancy laser setup for those laser light shows for the customers when they pick up - such sacrifice

Maybe it is my way of thinking that most of us don't have to worry about this for a while.

 

[piper1]

Assuming 5% better fuel economy,

Payback in years for $10,000 extra cost.

for a 7mpg tractor (now)
at $3 gal fuel = 4.9 yr payback
at $4 gal fuel = 3.6 yr payback
at $5 gal fuel = 2.9 yr payback

for a 10mpg straight truck (now)
at $3 gal fuel = 6.9 yr payback
at $4 gal fuel = 5.24 yr payback
at $5 gal fuel = 4.19 yr payback

These calculations have not factored in the cost of the DEF (the urea fluid) because I have no firm costs on it but,

A couple of things to keep in mind. DEF (the urea fluid) is forecast to cost in the $3-3.50 a gallon range in the beginning and get cheaper as bulk product stations get up and rolling. You will need 3 gallons of DEF for every 100 gallons of diesel fuel. On a new Freightliner (as an example) you can get a 23 gal tank that should allow you to go 6-8000 miles (depending on your fuel mileage) between fill ups. In that amount of driving you should be able to find a place to buy DEF at a competitive price.

With DEF, Volvo for example is claiming no more active re-gens of the DPF (soot filter). This will further save fuel. The engine exhaust will be hotter and there will be less soot to begin with, this should allow the truck to go a LOT farther between actually having to have the DPF removed and cleaned (most places will not clean, only sell a remanufactured DPF due to the compliance costs of having a cleaner, OSHA, EPA etc). You may get the full life out of the truck with no replacement.

Oil drains will be allowed to be safely extended again, if the engine is inhaling less of it's own exhaust, it will put much less soot load on the oil and it's acid nuetralizing chemistry (TBN).

Penske and ConWay Truckload (CFI) are both reporting positive results with CFI seeing 7 % better fuel economy. They also have said it will not be any serious maintenance issue. I also have it on good authority that right now the 10 k figure Is being used to scare folks into buying an 09 off the lot. When theses engines are in the new trucks being built there will be rebates that will bring the end cost to the buyer into the 7 to 8k range, still alot mind you. The truck makers war of words over EGR and SCR has a lot of people holding off buying because all they hear is how much better the 2010's will be and it (as well as the economy) has really hurt 09 on the lot sales.

I don't think we will see any rate increases because of these increased costs, but as the cost of trucks continues to rise, I do believe truck makers will need to reject the current "disposable fleet truck" mentality and build longer term high reliability trucks to allow for the initial capital cost to be spread out over a longer period. The days of the big fleet 3-4 year trade cycle may be numbered.

I could go on but mother Fed just called me and I am off!

 

[wallytrucker1]

Come on Greg, I've never jumped on the "lets get greg bandwagon", and now you're attacking me for my polished liftgate. I expected more from my brothers at leam...lol

Phil, have you considered "cash for clunkers" to off-set the future cost of a new engine.

 

[FIS53]

I can remember reading an article near the end of last year about the costs involved in the 2010 engines. At that time the estimated higher prices were over $8,000 per unit. So I don't think the companies mentioning the higher prices for the 2010 units is a scare tactic for sales of 09 units. I suppose someone is thinking that but the higher prices for 2010 units was mentioned back when they released the 07 dpf units.
Rob

 

[greg334]

Sorry Wally,

I was talking about the million dollar expediter club.

 

[moose]

A point of interest :

here's the link :

http://www.lmtruck.com/articles/lmtbase.aspx?storyid=542

Transport Topics Online | Trucking, Freight Transportation and Logistics News Daimler Sets 2010 Engine Prices


Daimler Sets 2010 Engine Prices

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Daimler Trucks North America will raise its medium-duty truck prices for 2010 models $6,700 or $7,300, depending on the engine, and $9,000 for its heavy-duty trucks to account for new emission technology, the company said last week.

The surcharges reflect the costs of implementing selective catalytic reduction technology, the parent company of Freightliner Trucks said.

The company will add $7,300 to medium-duty trucks using the Cummins ISC8.3 engine, and $6,700 to trucks using the ISB6.7 engine.

The $9,000 surcharge applies to vehicles using the Detroit Diesel DD13, DD15 and DD16 heavy-duty engines.

By Light & Medium Truck

 

[TeamCaffee]

We were able to take a tour of Detroit Diesel last week and spent quite a bit of time discussing the new 2010 motors and the DPF/Catalytic converters. We also discussed the issues with the fuel filters and how hard it is to get prime back. This problem has been eliminated in the 2010 engines and is user friendly to the DIY person and the fuel filters are easily accessible. The 2010 DD motors are going to be very quiet due to "webbing" incorporated into the block and other key components. All servicable components are above the frame rail except for the starter. Hopefully the ease of accesablilty to parts will lower shop time.

 

[ATeam]

We also discussed the issues with the fuel filters and how hard it is to get prime back. This problem has been eliminated in the 2010 engines and is user friendly to the DIY person and the fuel filters are easily accessible.

Thank you for clearning that up. It would have been really stupid to put fuel filter replacement out of easy reach of drivers who can change them themselves when needed.