With a new chief executive often comes a new direction. That’s the case at Torotrak, where Jeremy Deering has taken over from Dick Elsy. “The time is now right for us to adjust our approach to one of aggressive, accelerated growth,” says Deering.
“With a period-end cash balance of £10.7 million, it is time for Torotrak to put its hands in its pockets to push forward a number of its programmes.”
Torotrak has three main product areas: infinitely variable transmissions (IVT) with a current focus on heavy commercial vehicles, buses and off-highway vehicles; mechanical kinetic energy recovery systems (M-KERS), mainly for buses and urban delivery vehicles; and V-Charge, an induction boost system principally for cars. In all these areas, Deering sees a “substantial opportunity to introduce our clean technology into mainstream commercial and passenger vehicles worldwide”.
Asked what prompted the change of direction, Deering says: “We need to make it easier for tier-one suppliers to engage with our technology and commit to programmes.”
He adds: “To do this, we need to take risk and cost out of the initial stages for our customers by investing in simulation tools and demonstration platforms. Most importantly, this will take time out of the decision-making process and allow confidence to be developed earlier.
“The aim is to accelerate introduction of our technology and remove some of the barriers that can keep innovative technologies such as ours at bay.”
There is a sense that Deering is anxious to bring about returns more quickly than hitherto. Pressure may have come from shareholders seeking quicker returns on their investments.
In the next 12 months, Deering expects to authorise £2 million in accelerated expenditure to make many more prototypes available to the automotive industry, both in flywheel-type KERS units and in ratio-changing devices for compressors – namely V-Charge.
This protoype expansion will require the company to invest in manufacturing capability – whether at its headquarters in Leyland or through subcontract machinists – and additional simulation tools.
“We must learn everything we can about these systems,” says Deering. “This includes metallurgy and manufacturing processes. We must leave no stone unturned.”
As a technology innovator, Torotrak has the unenviable task of trying to bridge the gap between OEMs and tier-one and tier-two suppliers. Somehow, the company has to break into the supply route.
To minimise risk, OEMs assessing any new technology require the assurance of a tier-one supplier in the wings that can produce consistent, high-quality hardware. Likewise, tier-one suppliers need similar reassurance of potential OEM customers willing to take sufficient numbers of product to justify investment.
Deering hopes that Torotrak can break this cycle by providing low-volume components for development activities and fleet trials. In markets where initial sales volumes are likely to be in the thousands or tens of thousands, this capability will also allow Torotrak to supply production components or entire systems.
For example, with M-KERS, the urban bus market offers the best immediate hope of returns, so Torotrak engineers are talking to bus makers and operators with the intention of conducting independent fleet trials in 2014. These tests should quickly reveal the real benefits of an energy-release system fitted to vehicles with heavy stop-start duties.
The urban bus – unlike the car, which Deering sees as a much longer-term prospect for M-KERS – offers ample opportunity to integrate the technology within its existing structure.
On the V-Charge front, Deering expects to spread the technology across four platforms, from small cars to SUVs with engines of 1.6-litre or less, and into high-performance and premium vehicles that might require a two-stage device.
V-Charge is a technology that potentially appeals to different segments of the passenger vehicle market. In some segments, V-Charge could be offered as a performance-enhancing device. In other areas, the benefits could be in delivering lower fuel consumption.
To help establish the market, Torotrak is looking at a “shared manufacture-production route” where up to 20,000 V-Charge systems could be built each year. It is understood that the company is in discussions with several supercharger/turbocharger manufacturers and OEMs. It hopes to offer V-Charge units to enable a fuller understanding of the device, especially in terms of fuel economy gains, or even engine downsizing.
The intensifying exhaust emissions regulations are likely to help the demand for more fuel-efficient devices such as V-Charge.
Meanwhile, the third element of Torotrak’s technology portfolio remains the IVT based on the well-established disc and toroid configuration. Here, heavy vehicles offer greatest potential for growth. High fuel costs and torque requirements, often coupled to a need for smooth, progressive control, point firmly towards IVT.
In this respect, the next big milestone is likely to occur in the first quarter of this year. By April, Allison Transmission of the US is expected to make its final payment to secure exclusive rights for main drive transmission applications in commercial vehicles. If Allison chooses to maintain its exclusivity, that would preclude Torotrak from granting any further rights in this market segment beyond Tata Motors and the mystery “European truck and bus maker” (ETBM).
Operators of heavy commercial vehicles are likely to be prepared to pay a substantial premium to obtain a 20% fuel economy gain of the magnitude offered by a Torotrak IVT. This performance gain has implications for the ETBM and Tata Motors, both of which continue to evaluate IVTs.
Here again, Torotrak is keen to play a much more hands-on role in helping to accelerate the technology’s introduction. The deal with the company’s new tier-two licensee, Univance of Japan, is a good example of this. Together, they will develop and test a new stable of core components, with the potential for sub-assemblies to be supplied by Univance where required.
Torotrak is investing separately in a programme with an international steel maker to ensure that source materials and processes are well understood, fully validated and underwritten by respected suppliers. This approach goes beyond the normal role of a licensing company, but reflects what Deering sees as being a necessary plank of strategy.
“You cannot take millions of pounds in licence fees from customers and then reduce cost and capital investment,” he says. “This is not least because real success lies in getting the product manufactured, when we both start recovering our capital invested –
in our case, through per-unit production royalties.”
Meanwhile, in off-highway applications, Carraro in Italy continues with field trials in agricultural duties.
Deering praises the high intellectual level of Torotrak’s engineers, and one imagines he will widen their brief to allow new transmission technologies to emerge.
He also plans to grow the company’s engineering services, to support the growing list of OEMs and tier-ones that are taking up its technology with a full system integration capability. This growth, together with Torotrak’s manufacturing aspirations, could lead to a substantial increase in employee numbers over the coming two to three years.