Equipment Type

Eaton, Cummins JV to Focus on Automated Transmission-Engine Products

Eaton and Cummins Inc. have agreed to form a joint venture to formalize their ongoing collaboration

April 11, 2017

Eaton and Cummins Inc. have agreed to form a joint venture to formalize their ongoing collaboration in the development and manufacturing of heavy- and medium-duty automated transmissions for commercial vehicles. The joint venture will be named Eaton Cummins Automated Transmission Technologies. 

Photo: Eaton and Cummins have collaboratively developed SmartAdvantage powertrains with an emphasis on fuel economy. Components include Eaton’s UltraShift Plus automated transmissions and Cummins’ ISX15 and X15 diesels.

Cummins and Eaton will each own 50 percent of the new joint venture, whose formation is subject to regulatory approvals and customary closing conditions. The parties expect the transaction to close in the third quarter of this year. The joint venture will be part of Cummins’ Components business segment. 

Under the terms of the agreement, Eaton will receive $600 million in cash from Cummins for 50 percent interest in the joint venture, according to a joint statement.

The JV will include Eaton’s current UltraShift Plus heavy-duty and Procision medium-duty automated transmissions in North America, as well as a next-generation heavy automated transmission to be announced later this year. In addition, the JV will market, sell, and support Eaton’s current generation of automated heavy-duty transmissions to truck-builder customers in North America.

Eaton’s Vehicle Group will retain its global manual transmission and clutch businesses outside of North America, the statement said. It will also retain current generation medium-duty and heavy-duty automated transmission business outside of North America, as well as global aftermarket, light-duty transmission, agricultural transmission, and global automotive businesses and associated product lines. 

For several years, Eaton and Cummins have worked closely together developing SmartAdvantage powertrains primarily involving Cummins’ 14.9-liter ISX15 and now X15 diesels. Eaton has also developed similar products with truck builders using their proprietary diesels, and that work is expected to continue, said Ken Davis of Eaton’s Vehicle Group. 

Cummins likewise partners with most American truck builders in supplying diesels and exhaust aftertreatment systems, noted Ed Pence of Cummins. That business, too, should continue. 

Both companies have been squeezed by a continuing trend toward vertical integration among truck builders who prefer to sell their own engine and transmission components, observers say. The joint venture will strengthen the firms’ efforts to supply competitive products and thus survive in that market.

“The best product is going to win,” said Pence in addressing that issue. “The best product that is supported correctly is going to win.”

 

 

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