Cummins Engine Co. is making a major strategy shift in the way it sells its engines to the trucking market this month. At the heart of its new business philosophy is the belief that the truck manufacturer must be given the lead in coordinating total vehicle cost and pricing issues. Consequently, Cummins will stop giving direct discounts to dealers and end-users, thus allowing its truck OEM partners to better coordinate such price breaks.
Ed Pence, Cummins vp-sales, said the company is also focusing on several additional strategies that will enable Cummins to act more like the internal engine division of its OEM partners, rather than simply a truck component supplier.
The company's long-term agreements with PACCAR, Volvo Trucks North America and International Truck & Engine Corp. will allow it to offer those OEMs long-term price stability for engines, as well as “collaborative engineering and marketing opportunities” that can help reduce costs for Cummins and the OEMs, said Pence.
For Cummins, closer collaboration with the OEMs will allow it to eliminate redundant selling and marketing functions. And it will reduce the number of engine options it offers by cutting out unnecessary accessories that few customers ask for, rather than eliminating engine models or ratings.
