Meritor Expects Accelerated Growth
10 May 2000
Meritor Expects Accelerated Growth in the Global Commercial Vehicle Stopping System Market
TROY, Mich., May 10 Exciting global original equipment and
aftermarket opportunities, value-added technology innovations and an emerging
"light" commercial vehicle segment will be the primary drivers behind Meritor
Automotive, Inc.'s commercial vehicle stopping system growth over
the next three to five years.
According to Prakash Mulchandani, president of Meritor's Heavy Vehicle
Systems, the company projects its stopping system sales content per vehicle to
increase nearly 30 percent, and total revenues to grow nearly 40 percent, by
2005 in North America alone. Meritor further expects its presence in Europe
to expand due to increased stopping system outsourcing by original equipment
manufacturers (OEMs).
Key to the company's stopping system growth is the continued integration
of disc brake, lightweight drum, and wheel hub technologies acquired with the
purchase of LucasVarity's Heavy Vehicle Braking Systems 18 months ago.
Mulchandani -- speaking at a commercial vehicle advanced braking
technology review at its headquarters here -- said Meritor expects greater
demand for medium-duty hydraulic disc brakes due to the emergence of a new
generation of "light" commercial vehicles.
"E-commerce is creating an increased need for a smaller commercial vehicle
designed specifically for local deliveries," he explained. "We believe this
will soon become a large and significant market."
Mulchandani said the lighter commercial vehicle segment is growing in most
areas of the world. It consists of classes 3, 4, 5 and 6 trucks in North
America, 2.8 to 7.5-ton gross vehicle weight trucks in Europe, and two- to
four-ton payload vehicles in Japan.
"The segment will be supplied primarily by our current OEM customers. We
are well positioned to leverage our brake system technology -- as a result, we
anticipate good growth in this area during the next three to five years."
"The segment's growth will come predominately from professionally managed
fleets such as UPS, Ryder and FedEx," Mulchandani said, "plus a diverse range
of parcel delivery, rental and bus fleets."
"Meritor is in a unique position because we focus on the commercial
vehicle market, and we're very accustomed and geared to meet the needs and
volumes of these customers," he said.
"Our intention is to provide this segment with completely integrated
hydraulic brake systems, including anti-lock braking systems (ABS) and power
boosters, that provide superior lining life, reduced operating noise and
greater performance."
Meritor expects the consolidation and/or alliances of OEMs around the
world, increased outsourcing by OEMs in Europe, and emerging markets in
various global regions to contribute to its stopping system business growth.
As a result of OEM consolidation, reductions in the number of suppliers
drives the need for added economies of scale and one-stop shopping,
Mulchandani said. Meritor provides a combination of scale and single sourcing
capability with a broad range of innovative solutions.
"In Europe, there's a growing trend among OEMs to outsource non-core
vehicle systems and components, and that includes stopping systems,"
Mulchandani said. "We believe the overall market there could more than double
within the next five years."
Mulchandani said Meritor also expects significant heavy-duty truck volume
growth in other markets around the world -- he cited India, China, Brazil,
Africa and Mexico as those with the greatest potential.
"Key to our success is our ability to serve to markets anywhere our OEM
customers need us," Mulchandani explained. "Right now, we're the only
stopping system supplier operating in every region of the world, and we offer
virtually any needed drum or disc configuration.
"That's a very profound point. Each market has specific demands based on
factors such as terrain, climate and government mandates. Our strategy is to
be there first, then cost-effectively match our knowledge, technology and
support system -- including replacement parts and service -- with our
customers' needs."
Mulchandani said value-added, innovative technologies would continue to be
the key enabler to Meritor's stopping system business growth and success.
"It comes down to enhanced safety, lower weight, less maintenance, and
longer life," he explained. "We are continually investing in and developing
technologies that meet these demands."
Mulchandani referenced electronic braking system technology (EBS) and air
disc brakes as key enablers for meeting customer demands in the not-too-
distant future.
"I think it's fair to say that regulations around the world will continue
to call for higher performance braking systems to enhance vehicle safety.
Once industry issues such as cost and system redundancy are resolved, we'll be
well positioned to serve the market with a world-class EBS system."