GENEVA - Dodge will stop using Cummins diesel engines in its Ram pickups and switch to diesels built by Mercedes-Benz in Germany, said DaimlerChrysler Chairman Juergen Schrempp.
The change should begin with the next generation of the Ram pickup, due in 2002 as a 2003 model, said Mercedes-Benz manufacturing spokesman Enrico Mueller.
It is unclear which Mercedes engine will be used. Mueller said a common-rail diesel injection engine might be the choice. These engines are designed for passenger vehicles and range in size from 2.0-liter to 4.0-liter.
But a manager with Dodge powertrain development in Auburn Hills, Mich., said his team has been working on packaging Mercedes' MBE-906 diesel engine in the Ram.
The MBE-906 is a six-cylinder, 6.4-liter, turbodiesel. It is a heavy-duty truck engine available in DaimlerChrysler's Freightliner and Sterling brands. The MBE-906 is larger than the Cummins engine and offers between 190 and 280 hp.
The manager, who declined to be named, said his team got the green light last month to continue engineering the MBE-906 to fit the Ram.
The switch to Mercedes engines is one way DaimlerChrysler is trimming costs, Schrempp said.
Cummins Engine Co., of Columbus, Ind., began supplying engines to the former Chrysler Corp. in 1988, said spokeswoman Marya Rose. DaimlerChrysler is Cummins' largest customer, accounting for $1.1 billion of Cummins' $6.3 billion revenue for 1998, Rose said.
Sales to DaimlerChrysler's Ram pickup line account for about $250 million annually, said David Healy, an auto industry analyst for Burnham Securities Inc. in New York.
Healy said the Dodge Ram business is important to Cummins because it diversifies the diesel maker's almost total reliance on heavy-duty engines. 'It will hurt,' Healy said, 'but it won't put them in Chapter 11.'
Cummins also sells heavy-duty diesel engines to Freightliner, owned by DaimlerChrysler.
'We are very pleased with the (current) arrangement with DaimlerChrysler. They are a great partner and we hope to continue to do business with them,' Rose said.
Christoph Walther, DaimlerChrysler's senior vice president of communications, said DaimlerChrysler's decision will 'step on Cummins' toes,' but the plan is going forward. Offering a Mercedes diesel engine in the Ram pickup 'is one of the things that would be very attractive to the customer,' he said.
GYRATING STOCK PRICE
In January, outgoing DaimlerChrysler Chairman Robert Eaton was quoted as saying his company had no plans to replace Cummins engines with Mercedes engines. Speculation about the possible loss of that contract prompted Wall Street analysts to keep close tabs on Cummins.
Cummins' stock closed Thursday, March 2, at a 52-week low of $32.93 per share.
Cummins provides its 5.9-liter inline turbocharged six-cylinder diesel exclusively to DaimlerChrysler in North America. A similar engine is sold to Ford Motor Co. for South America, spokeswoman Rose said.
Diesel engines are a popular option in Ram pickups. Of the 410,130 Ram pickups sold in the United States in 1998, 75,062 were equipped with Cummins diesels.
Dodge sold 428,930 Ram pickups in 1999. The diesel share of those sales is unavailable.
Cummins was the 11th-largest supplier of original equipment parts to North America in 1998, according to Automotive News data.
Robert Sherefkin contributed to this report