SCR versus EGR Diesel Marketing - It’s Changing Some Minds Already

Implications: Volvo Mack Division has started a smart project to educate users, dealers and other interested parties on the positives and negatives of Selective Catalyst Reduction (SCR) using Urea versus Exhaust Gas Recirculation (EGR). In March of this year, Daimler Detroit Diesel Division started to educate the market about their SCR approach. Some surveys showed an overwhelming bias toward EGR for 2010, but that is changing with this type of “educational” marketing. This has major implications for OEM market share potential and 2009 pre-buy considerations.

Analysis: In the real world, one can have a great product, great marketing and great timing - and you will most probably have a winner. Great marketing and so-so product can also be a winner. A great product with poor marketing can be disastrous. And so on… We all know the deal!

The accompanying article references a Mack Web Site where Dave McKenna, their Powertrain Products Marketing Manager, is addressing questions submitted from the field. Dave is a good guy and an ex-sales type who does a very good job of taking technical info and putting it into understandable language. Whether you agree with what he says or not, it tells a good story. With my engineering-type thinking, I generally agree with his thoughts.

Here are some interesting points covered where I have summarized them and made comments:

--In discussing EGR, it is being called MEGR with the “M” being referred to as Massive when comparing 2010 level versus current ones. For 2010, the recirculation rate for EGR goes over 50% compared to 35% today. For EGR, this is one that reminds us of just more heat problems, bigger stainless steel cooling modules and more cost. Then there is the heat rejection meaning higher fuel costs.

--Regarding Urea availability, they note that Diesel Exhaust Fluid (DEF) will be available all major OEM dealer networks - along with Truck Stops / Travel Centers - in quantities of one gallon jugs, 1,000+ gallon totes and tanker trucks. Fleets with terminal fuel are preparing, too. We have written similarly in the past - with some locations offering it as a separate pump.

--In talking about DEF, the issue is how often it needs refilling. While it depends on how hard one works the engine, it about 3% of diesel fuel use or the 2nd or 3rd diesel fillup timetable requiring 3 to 7 gallons of Urea.

--The funniest issue is where Urea comes from. It’s not yellow barnyard fluid or from jugs thrown out at along the highways. Its origins are from “cheaper” Natural Gas. Also, farmers' Urea is not the right concentration. For DEF’s, it’s about 32% Urea mixed with deionized water - and non-hazardous.

--In covering Emission Credit Banking & Trading, the discussion includes how it works today in the Heavy Duty segment, then gets into how it includes all models from an OEM that can be traded in 2010. A concern noted is how credits allowing EGR will be consumed after 2010. An additional one not noted is that with the reduction of pickups sales especially with Ford / Navistar engine and Dodge / Cummins engines, there will be fewer credits to trade and make their move to SCR sooner than originally thought. Also a market share increase in EGR engines will eat up credits too.

To summarize, there is a lot more detail included and one can draw their own conclusions. The bottom line is that “information” leads to better decisions. Recent surveys by real buyers is that negative sentiment regarding SCR is changing, especially if we can get better fuel mileage and reduced heat loads. This has implications for both Navistar and Cummins with their EGR offerings. Stay tuned!