ecap1952

Cummins' Mysterious Rise

If you followed the on-highway truck market you would understand the rise in Cummins. People still think that Cummins makes a lot of money from selling engines to On-Highway truck manufacturers like PACCAR (Keworth and Peterbilt),Volvo (Volvo and Mack), Daimler (Feightliner, Western Star...) and Navistar. They don't. If you look at the worldwide diversification out of the on-highway market over the last few years that Cummins has been doing, you would understand that they know that they make a whole lot more money per engine on other markets, like electric power and stationary engines.

They have diversified, because like Cat, they see the truck manufactures listed above are putting their own engines in their trucks. PACCAR is building a $300M plant in the southern US to build an engine for DAF (a European truck/engine company that PACCAR owns), Daimler is putting Detroit Diesel (which they own) and Mercedes engines in their product. Volvo is puts their own engines in the Mack and Volvo trucks. Navistar is putting in jointly developed MAN/Navistar engine in their trucks.

Cummins and Cat are the secondary engine suppliers to all these companies. With Cat choosing not to provide EPA2010 engines, the market thinks that this was a great windfall for Cummins. Yes, they will get some small increase to production, but the effect to the bottom line profit did not justify the 14% stock increase yesterday.

Next time do your homework before you blog and I have to do it for you.