To: Dennis Roth who wrote (179754 ) 7/31/2013 11:45:34 AM From: t4texas 2 RecommendationsRecommended By
Respond to this was the 12 liter natural gas engine exchange between the jp morgan analyst and cummins management yesterday on the earnings conference call. looks like the introduction is going pretty well so far. Ann P. Duignan - JP Morgan Chase & Co, Research Division Okay. And a real quick follow-up on the same sort of question on the 12-liter natural gas engine with Westport. We heard a lot of pent-up demand on the alternative fuels conference a couple of weeks ago. When would you expect that business to start to become material? Richard J. Freeland - Vice President and President of Engine Business Well we've -- as you know, we introduced in April with some of the ratings and we said we would bring out the full ratings in August. And so we're on track with that. In fact, we're about 3 weeks ahead of schedule. And so there is lots of interest. As you know, the products are really just now getting in the market. The feedback on them is terrific. And so there's a lot of excitement for it. I think just putting it in perspective, we still see over the next couple of years, that's 2% to 3% of the total truck market. And longer term, we're thinking 5% to 10% over a 5- to 10-year period. N. Thomas Linebarger - Chairman, Chief Executive Officer and Chairman of Executive Committee And I think, Ann, this is where kind of disagreement starts among different people with different interest in the truck market. Nobody really knows what final percent natural gas will be of the truck market. Some of it will depend on fuel prices and some of it will depend on other factors about buildout of availability and things like that. But this is where it kind of gets -- people kind of lose track of things. If you're very invested in natural gas business, you'll be thinking that because there's a lot of interest, there'll be hundreds of thousands of units in no time. Most of us that have been watching all of the units don't really think that's very likely. It doesn't mean it's not of great interest. There are some customers who think that this is the answer to their problems. In fact is, though, if you look at all the orders and all of the buys in total, most people are buying a few now to try them, as opposed to replacing their whole fleet. And we'll see what happens after they try them, at what rate people change. But I think Rich has kind of given you sort of the middle-of-the-road consensus view that maybe it gets to 10% or 5% or something like that over some period of time. But we're prepared for all of those eventual outcomes. But it's just kind of what we see right now and we are working very actively to get that 12-liter in as many peoples' hands, who want to try it, as we can, while still making sure we're doing our normal quality launch. So we perform -- with every launch of a new product, we make sure we have good infant care, we know every customer who's got it, we're tracking everything really closely and that's really important in this market just like every other. So we're doing that as we go.
