DETROIT (Reuters) -- The head of Daimler AG's commercial truck operation said the company will invest $375 million at a complex near Detroit to build diesel engines for medium duty trucks, expanding a strategy of building and selling trucks, engines, transmissions and axles as a package.
Daimler had previously expanded its Detroit operations to produce heavy-duty automatic transmissions, which have been "a runaway success," Wolfgang Bernhard, head of Daimler's global commercial truck operations, told Reuters today ahead of an appearance in Detroit.
Bernhard said he expects demand for medium and heavy trucks will be "slightly softer" in North America next year, but should still be above relatively strong 2014 levels. European demand will be flat and Brazil will "continue to be very difficult," he said.
Earlier this week, rival truck maker AB Volvo said it planned to idle its North American factories for a total of 2.5 weeks in December and January to reduce swelling inventories.
Bernhard said Daimler, which controls about 40 percent of the U.S. heavy truck market, is not cutting back. Production at its Detroit engine and transmission factories is still running around the clock, seven days a week, he said.
Daimler's latest investment in Detroit builds on a strategy Bernhard has pursued to bring engineering and manufacturing of the company's commercial trucks under one roof.
Traditionally, especially in North America, heavy truck makers such as Paccar Inc. or Navistar International Corp. have purchased engines, transmissions, axles and other major components from suppliers such as Cummins Inc., Eaton Corp., Caterpillar Inc. or Dana Holding Corp.
Government demands to cut carbon dioxide emissions are putting more pressure on commercial vehicle makers. Bernhard said Daimler's response will be to design and engineer itself more of the technology in its vehicles.
"We can perfectly optimize those components to each other to get the best fuel economy and reliability," he said.
Bernhard said Daimler is also using its own technology to develop autonomous driving systems for future commercial vehicles. He said trucks that could drive themselves on open freeways could be available by 2020. Daimler is testing autonomous driving technology on heavy trucks in Germany and the United States.