As Class 8 Truck Orders Continue Collapse, VW Has A "Fix" For Navistar's Diesel Emission Issues

Tyler Durden's picture

Truck-related stocks have massively outperformed the broader markets this year up over 30% while the S&P 500 is up only around 7%. This outperformance has come despite abysmal Class 8 net orders which seem to just get worse each month with August 2016 net orders down over 25% compared to last yearIn fact, the level of trailing 12-month net orders is the lowest since January 2011 with YoY changes now in negative territory for 18 consecutive months.

July Class 8 Truck Orders

Class 8 YoY Change

 

This news comes as Volkwagen just announced a $256mm investment in Navistar International and agreed to collaborate on "strategic technology" and to establish a procurement joint venture.  The news pushed Navistar stock up over 40% on the day alleviating near-term investor concerns over an aggressively levered balance sheet and massive pension under-funding. 

The investment in Navistar comes after its market share in heavy-duty trucks has been cut in half over the past five years on the back of a diesel emissions scandal.  The scandal ultimately resulted in Navistar paying the SEC $7.5mm to settle allegations it misled investors over its ability to comply with new diesel emission standards that went into effect in 2010.  Navistar had attempted to develop a proprietary solution to comply with the new 2010 regulations, rather than using the same technology as the rest of the truck and engine industry...a bet that obviously didn't work out as planned.  Per Bloomberg:

Navistar sought to comply with federal engine emission rules that took effect in 2010 by using an exhaust gas recirculation (EGR) technology that funnels emissions back into the engine’s cylinders as a way of lowering the nitrogen oxide that is released. The trouble for Navistar is that the technique did not reduce the emissions sufficiently to meet the U.S. rules, which led to the company paying a penalty of nearly $2,000 per engine. Rival engine makers, such as Cummins, Paccar, and Daimler, use a system called selective catalytic reduction that applies a urea-water fluid to the exhaust gases to convert the harmful nitrogen oxide to water and nitrogen.

 

In July 2012, the Lisle (Ill.) company reversed its decade-long course and said it would abandon the technology in its engines. The board soon ousted CEO Dan Ustian, and two months later the company reached a deal with Cummins to supply its widely used ISX15 diesel engines for Navistar’s largest truck models. That engine also meets emissions requirements that take effect in 2014.

Luckily for Navistar, if they ever want to revive that EGR technology we hear that VW has an excellent "fix" to help meet diesel emission standards. 

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yogibear's picture

LOL, a software fix to fool the EPA.

Dizzy Malscience's picture

Well, OK…

Sounds like a fix of Clintonian parameters and proportions to me

..as long as VW did a decent donation to the Clinton Foundation.

 

And..

Unless that evil cabal is taken down, how much do you want to bet Obama ends up as a consultant or a board member?

bleu's picture

Too bad America is NEVER getting better. http://wp.me/p4OZ4v-3z

Huckleberry Pie's picture

So the collapsing trucking industry is more focused on diesel emission standards? Ok..haha. Maybe Caterpillar could get in on this.

RafterManFMJ's picture

...harmful nitrogen oxide to water and nitrogen.

So, so harmful. How many ppm are being released again?

Catullus's picture

Another US manufacturer destroyed by Obummer.

2banana's picture

More fiction being peddled...

yogibear's picture

Maybe VW can pay the EPA emissions firmware writers  to bypass the real readings.

LOL, Obummers carbon credits.

cowdiddly's picture

The EGR (exhaust gas recirculation system was the dumbest idea they ever came up with. Pouring the exhaust gases back through the engines cylinders in hopes of it burning more. It works on paper as even a small lawn mower engine will actually run on repiped exhaust gas alone once running. Lots of gas cars have a smaller version of this same system.

The problem with a diesel is the massive amounts of black soot that pours out when extra diesel is injected as any one who has ever been behind a hottrodded diesel pickup or a loaded semi on a grade is only too familiar with.

Even on gasoline ingines this stops the internals of the intake manifolds on some engines up where they can't breath and about the only thing you can do without expensive complete disassembly and vat cleaning repairs is try to run some transmission fluid thru the intake or even water while the engine is warming up to try and pop some of the carbon buildup off.

The new Cummins diesel pickups are stopping up so bad there is actually an entire cottage industry selling and installing EGR delete kits. Although it is illegal to tamper with emissions, what else are you supposed to do? Some of my friends engines have stopped up so bad after only about 80k that they had to do something. You take the egr valve off and its a solid rock like block of carbon completely stopped up.

I can just imagine the problems the bigger trucks are having as they burn a lot more fuel. And don't even get me started on the blue exhaust additive crap.

 

Id fight Gandhi's picture

Is diesel soot any concern other than smell and dirt? I thought these were naturally cleaner safer burning and could be used indoors and underground but gas would kill people with CO.

cowdiddly's picture

 not sure but to me it looks like carbon and a heavy particulate that settles towards the ground.

It just the diesel engine manufacturers having to deal with unreasonable EPA demands and having to do what they know to be stupid stuff to comply, with the consumer left holding the bag. To pull a load you got to build a fire in the box and  "roll some coal."  You ought to look at the stack on a tractor with a ten bottom plow locked in the ground. You are not going to get away from it. IMHO

Offthebeach's picture

Lot of things deisels don't get credit for. They burn less refined, cruder fuel. So less refinery polution. They are ( were ) simpler to make, and lasted longer with less maintenance. A tripple manufacture/labor savings. They got better millage and I don't know but suspect that cargo weight per mile per pollution unit of whatever kind the diesel is less.

Non of this bigger picture chemestry/economics is factored by the EPA.

If trucks and equipment ran on gas engines, they would die like flies.

The diesel is one of the worlds greatest invention.

cowdiddly's picture

Yes it is and  you are absolutely right way more efficient

King Tut's picture
King Tut (not verified) Offthebeach Sep 6, 2016 8:31 PM

Diesel just proves the old adage- if the Germans haven't already thought of it then it's not worth inventing

glenlloyd's picture

Again lets count, number of people killed by Navistar or VW emissions scandal? ZERO, number of people killed by GM lying and hiding / denying they had an ignition switch problem FOR MORE THAN A DECADE?

I think you get my point with this.

The EPA has no constitutional authority, it is their job to destroy private enterprise.

RAT005's picture

Diesel has 15% more energy per gallon.  That accounts for most of the additional mpg and some of the improved low end torque.  The engine mechanics aren't as much of the reason as people think. 

Diesel engine's ability to burn the less refined higher energy density fuel is the magic. As others have suggested, diesel emissions should be measured vs. Work done and fuel input. 

Diesel has a much lower vapor pressure which is why it's harder to burn and much safer from an explosive perspective.  That's why it's so popular in shipping or anywhere the fuel is stored below deck.

jerry_theking_lawler's picture

Which is why they must 'kill' the diesel engines. It makes too much sense. 

NoPension's picture

Don't be running ANY engines indoors. They all create CO.
Diesels work better ( or do their job) at lower speeds, and the fuel, being more of an "oil" , keeps the parts better lubricated, rather than wash off the motor oil. There are somewhat less moving parts, electrics, etc, although newer versions are loaded to the max with computer controls, so that benefit is being lost.
But diesels tend to run a lot longer than gas engines. And the low speed torque is what makes them great in big rigs and heavy equipment.

Vatican_cameo's picture

 

EGR on a diesel works much differently than on a gasoline engine.  You should read up on it because your "theory" on Diesel EGR and Soot are wrong.

cowdiddly's picture

No its not wrong. I don't have to read up on it. I live it. Ive operated and worked on these diesel engines my whole life.

You need to understand one simple thing. A combustion engine is in a lot of ways an air pump. As any hotrodder with tell you, the more air and fuel you put into an engine and the better you can make the flow the more HP you are able to build. Diminishing this flow with extra systems and impeding this flow only makes you have to burn more fuel for the same abount of horsepower to be generated.

So in effect what you have done is make the air pump less efficient, it has cleaner exhaust but you have to burn more of it to do the same amount of work, So you have defeated the purpose.

glenlloyd's picture

The conclusion is incorrect, the only thing you're defeating is your fuel efficiency, but that's not what the function of the EGR is for.

Seeing Red's picture

As someone how majored in engine design in college (and I work on them too), I find Cowdiddly's remarks right on the money.  All papers on diesel EGR I glanced at mention increased greatly soot production.  The tech here sounds a little like a bandaid with side effects requiring more bandaids -- not what you want to apply to an otherwise high-reliability truck engine.  The EGR concept looks a little more promising on turbo-diesels.

Sure the high temperatures create more NOx, but diesels require high temperatures for ignition (see NoPension's post below).  EGR probably works great until the soot builds up (like CD was saying) ....

"In theory, there is no difference between theory and practice.  In practice, there is."

michelp's picture

"So in effect what you have done is make the air pump less efficient, it has cleaner exhaust but you have to burn more of it to do the same amount of work, So you have defeated the purpose."

"Rien ne se perd, rien ne se crée, tout se transforme"

Lavoisier

m.

SamboSaysMore's picture

Look up CRT-Effect, douche bag..... If you don't understand that, then spare us your pompous, self-grandizing diatribes. That's how you manage soot due to EGR with a Diesel Particle Filter (DPF).

Or you like to drive around and "smoke" cyclists and small kids with your exhaust gases.

cowdiddly's picture

Yea CTR effect, thats right up there with carbon credits and global warming with me. That's just some more of your safe space politically correct BS because your mad someone has to do some actual work with machinery and you spotted a little black smoke. Hope I see you in my field on a bicycle numbnuts. Ill put 320 at the drawbar horses of smoke on yur bicycle ridin ass and make you look worse than Obama. lol

Bwana's picture

I have a Dodge diesel with and exhaust brake. When I get an idiot screwing with me sooner or later I get tired of the idiot. All I have to do is step on it hard, let off the accelerator to shut the exhaust brake which stalls the turbocharger then put the pedal to the metal. A beautiful black cloud belches from the exhaust engulfing the idiot. It sure stops the tailgating.

NoPension's picture

Nitrides of oxygen, during the combustion process, are created by high temperatures. Exhaust gases are metered into the intake stoke, to "cool" the cylinder temperature. This helps to lower internal combustion temperature, and limit oxide formation. The catylitic converter then takes exhaust gases, and " burns off" remaining un burnt hydrocarbons.
This is a gas engine.

Diesels make power the same way, 4 stoke cycle, but instead of a spark plug, use high compression, and the heating of the air, to ignite the fuel mix.
I don't have enough diesel performance knowledge to accurately explain why egr doesn't work as well, but I speculate the temp range for hot air ignition, and nox creation, are to close together.

Software manipulation should work spendidly.

SamboSaysMore's picture

EGR in an Otto (gasoline-powered, spark-plug ignited) engine gives the air/fuel mixture a supercharging boost into the combustion chamber (i.e. pushes more of the charge mixture into the chamber than regular engines aspiration achieves), which improves the Otto engine combustion efficiency and retards the formation of nitrous oxides (NOx) as well.

For a Diesel engine (within in-cylinder fuel injection and compression-ignition), the EGR has little benefit of supercharging the air being drawn into the combustion chamber and adds nothing directly to combustion efficiency, in fact it reduces it somewhat, but it is the most effectice means of preventing NOx formation in-cylinder (preventing more than 80% of NOx) that would form otherwise. If you take out EGR then smog will get a lot worse, while the soot generation will improve.

warsev's picture

No. "Pouring the exhaust gases back through the engines cylinders in hopes of it burning more" is not the idea of EGR. Oxides of nitrogen are created by excessively high combustion temperatures. It's the devil of diesel engines, which have higher combustion temperatures than gasoline engines. At very high temperatues the oxygen and nitrogen in the air combine to form NOx. The idea of EGR is to reduce the oxygen content in the cylinders and so reduce combustion temperatures. It robs some power but is generally effective at reducing NOx. American auto manufacturers used this technique on gasoline engines for years.

RockySpears's picture

I always thought the VW emissions thing would spread to other manufacturers. 

  When I worked for Cummins on the emissions testing, the engineers always played with the engine timings at the 13 points of the test.  They would sit for hours just tweaking the particular points that they knew would be tested (it was all just software, no need to change cam keys or pump keys) just play with the numbers until the emissions monitor told you things were OK  (to hell with fuel economy etc as they would even out over the engines use, it's not as if the engine actually runs at these points constantly anyway. Never understood how they were never investigated too.  I assume ALL diesel engine manufacturers did/do the same, because, let's face it, there is only so many ways you can play with Suck-Squash-Bang-Blow.

 

RS

Id fight Gandhi's picture

What's class 8 truck mean to us simple folk?

Cautiously Pessimistic's picture

Ummmmm .... like .... DUH!  Of course orders for BIG RIGS are falling.  Everything is getting shipped by DRONES now.

Geeezzz... do I have to do all the heavy thinking around here??

roddy6667's picture

Some of these Greenies are pointing out how much more effficient  railroad is than trucks. I think we should install tracks and a siding at their houses.

AE911Truth's picture

VW could improve sales by deploying Stanley Meyer technology on their products.

But could they compete with this?

ElectroGravitic's picture

When you absolutely must have it delivered yesterday.

ToSoft4Truth's picture

VW should invest in quantum computing with the explanation the emissions 'issues' in this universe make for less 'issues' in one of the other multiverses.

NoPension's picture

My complaint against the Feds is testing for ppm, instead of overall parts per mile.
A small engine, getting very good mileage, could have higher ppm than a less fuel efficient car with a bigger engine.
But the overall end result would be " less pollution ".
Besides, cars are so fucking clean, relatively, it's almost a waste of time to test them. Cow farts, jets and waste treatment plants are probably worse.

Yen Cross's picture

  First it was a Korean shipping company. Now, it's a trucking company or three.

 What part of over capacity are people missing?

  Those trucks need to be melted down, and turned into cheap Chinese silverware. lol

gregga777's picture

The diesel exhaust gas recirculator actually has to first cool the exhaust gases. It does this by passing the exhaust gasses through narrow, water-or oil-cooled passages. These narrow passages quickly become blocked by soot and unburned fuel. Diesel fuel is oily and combined with soot creates a black goop that very effectively stops up the EGR assembly. The only remedy is either replacement (a $1500 item for some light pickup truck manufacturers engines) or disassembly and cleaning (many $ hundreds in labor for removal & replacement plus at least 8 hours to clean the EGR with solvents). I'm sure that the costs for Class 8 trucks are much higher not to mention the downtime costs.

coast's picture

i didnt even read this article, and I dont know all the statistics, I do know tho, that when a vehice of an kind that uses diesel drives by me, it almost kills my lungs...sorry, but just telling the truth,,,one diesel vehicle feels like I smoked 10 packs of cheap cigaretttes...

Savyindallas's picture

Orders down 25% and the stocks up 30%? What's the story here? Seems par for the course. 

cat-foodcafe's picture

The primary issue with all this is, and always has been, that the GOVT cannot legislate physics.  All the software monkeys, all the EGR stuff, all the catalytic converters, all the hung-on crap will just degrade performance, exactly like cowdiddy says.  The diesel engine has its own characteristics, and perhpas electronic fuel injection makes it work the best it can work, but after that, you just degrade performance.  GOVTs everywhere legislate physics....and they fail.  Wonder why > ?????

GunnerySgtHartman's picture

Heh, ZH is the last place I expected to see an article on Navistar.

Cowdiddly, great comments.  I had my concerns about the whole 'Advanced EGR' gamble from the outset.

 

Last of the Middle Class's picture

Navistar should have just donated $500,000 to Cankles' campaign. Much cheaper and incredibly more effective that attempting any real world solution.