U.S. demand for diesel engines and related aftermarket parts is forecasted to increase 3.8% annually through 2011 to $20 billion, a sign of the industry’s continued strength since coming off a high 2006 sales level.
According to The Freedonia Group, an industry market-research firm, diesel engine demand was artificially stimulated in 2006 by a boost in the key heavy-duty truck market as fleets sought to buy ahead of 2007 emissions-regulation changes. These changes will add both significant cost and uncertainty since first-year engines using new technologies may not be as robust in terms of reliability and durability. These and other trends are presented in “Diesel Engines to 2011,” Freedonia Group’s latest study on the diesel market.
The motor-vehicle market accounts for more than 70% of diesel engine demand. Heavy-duty trucks comprise the largest segment in this market, but the best opportunities will be found in the light-duty truck segment. Demand for diesel engines and parts in light-duty trucks will expand at a robust 9.6% annual rate, according to the report.
Although a much smaller market, passenger cars will also fare very well. Diesel engine-powered light vehicles currently account for less than 3% of new-car sales in the United States, so there is opportunity for a significant increase in penetration rates.
Off-highway diesel engines will experience a slowing but still robust demand through 2011 as new Tier-4 off-highway diesel-emissions regulations phase in between 2008 and 2015. These reductions, with particulate and oxides of nitrogen emissions mandated to be further reduced by about 90%, will likely be achieved through the use of control technologies such as advanced exhaust gas after-treatment.
The report also notes that shipments of diesel engine products from U.S. manufacturing sites will grow 2.3% annually through 2011 to $18.8 billion, driven by rising exports, which will benefit from the weakness of the dollar. Gains will be supported by technological enhancements and newer generations of diesel engines that meet government emissions standards. Shipments will be constrained by the continued shift of production to lower-cost regions, which will also increase the net trade deficit in diesel engines.
The report is available from The Freedonia Group. For more information, visit www.freedoniagroup.com.
Source: The Freedonia Group. (March, 2007). “Diesel Engines to 2011.” Retrieved April 27, 2007 from www.freedoniagroup.com.