EUROPE REPORT
DEUTZ and Rolls-Royce’s Power Systems division have completed the transaction for DEUTZ to take over the sales and service activities for various Daimler Truck industrial engines. The transaction relates specifically to engines with displacements from 5 to 16 litres and power output of up to 480 kW.
Under the completed transaction, DEUTZ will take over distribution of the MTU Classic model series and the MTU 1000 to 1500 engine series, which are based on three Daimler Truck engine platforms. These engines are used in a range of off-highway applications, mainly in the agricultural machinery and construction equipment sectors.
The service activities for engines that are already in use also form part of the takeover. Following a transition phase, these activities are expected to be carried out exclusively by authorized DEUTZ partners starting Jan. 1, 2025.
The takeover follows close on the heels of DEUTZ’s alliance with Daimler Truck to develop and market medium- and heavy-duty engines (MDEG and HDEP platforms) in the off-highway segment. The alliance was entered into by the two companies in 2023 and is slated to begin in 2028.
Rolls-Royce’s Power Systems will continue to use engines based on Daimler Truck technology to power railway and military land vehicles, as well as for power generation.
Source: Deutz Read The Article
Source: Rolls-Royce Read The Article
PSR Analysis:
Impact on Rolls-Royce Power Systems
- New focus: By divesting its lower-power-range engine business, Rolls-Royce Power Systems can concentrate on its core strengths in higher-power engines and systems, allowing for greater investment in research and development, and potentially leading to technological advancements in this area.
- Financial benefits: The sale generated a significant cash inflow which can be used for other strategic initiatives or to strengthen the company’s financial position.
Impact on Deutz
- Expanded market share: The acquisition significantly expands Deutz’s market share in the lower-power-range engine segment, particularly in agriculture and construction machinery.
- Strengthened product portfolio: Deutz gains access to the mtu Classic series and the mtu engine series 1000 to 1500, enhancing its product offerings.
- Potential synergies: There’s potential for cost synergies and operational efficiencies by integrating the acquired business into Deutz’s operations.
Impact on the Market
- Increased competition: Deutz becomes a stronger competitor in the lower-power-range engine market, potentially leading to increased competition and price pressures.
- Increased Sales: from 2025, unit sales for Deutz could increase by 12-15% compared to volumes before the agreement, and by 50% in the 5-16 litres engine range, according to Power Systems Research OE Link™ database.
- Potential for innovation: With both companies focusing on their respective strengths, it could stimulate innovation in both the higher and lower-power engine segments.
Overall, the deal is seen as a positive strategic move for both companies. Rolls-Royce Power Systems can now focus on its core competencies, while Deutz strengthens its position in the lower-power-range market. The long-term impact on the market will depend on how the two companies leverage their respective strengths and adapt to evolving market conditions. PSR
Emiliano Marzoli is Manager-European Operations for Power Systems Research
