EUROPEAN REPORT
Daimler Truck and Deutz have entered a strategic partnership to manufacture engines. Under the plan, Daimler Truck acquires 4.19% of the shares in Deutz AG, in return for which Deutz pays for access to Daimler Truck internal combustion engines.
The move is a consequence of Daimler’s decision to stop investing in the development of their medium duty engines (MDEG Series) from 5.1 to 7.7 Litres. At the same time, Deutz will be able to access Daimler technology and further develop it for off-road applications, such as construction and agriculture machinery. The heavy-duty engines will continue to be manufactured by Daimler Truck at the Mercedes-Benz plant in Mannheim and be delivered to Deutz to complete the engine system. Production of the medium-duty engines is expected to take place at Deutz in 2028.
PSR Analysis: Daimler announced in 2021 that they would not invest further in the development of Medium Duty engines for Euro 7 emissions regulations. Moreover, they have a goal to reduce their CO2 emissions by 40 to 60%, by developing battery or fuel cell trucks.
The volumes of the MDEG platforms are a small part of the Daimler line-up of truck and busses engines. According to our database EnginLink,™ roughly 30% of engines produced by Daimler for the Truck and Bus industries belong to the MDEG series.
Furthermore, we forecast that the same platform will decrease to 20% in 2028. Daimler thus is focusing its investments on alternative drives. On the other hand, Deutz, which had a significant production of on-road engines until 2012, would be able to access this industry again. When we also add the off-road applications, the potential for growth becomes even bigger, as Daimler is currently producing some 60,000 engines in the medium and heavy duty range. While demand will decrease in future years, we expect this trend to be slower compared to the on-road segments, particularly for the heavy-duty series.
Emiliano Marzoli is Manager-European Operations for Power Systems Research
