Deutz takes over sales, service for Rolls-Royce Power Systems

Deutz and Rolls-Royce’s Power Systems Business Unit reached a general agreement on the takeover of sales and service operations for various industrial engines in the 5 to 16 L range with a maximum power output of up to 480 kW.

Subject to final agreement, Deutz is taking over the distribution of the MTU Classic series and the MTU engine series 1000 through 1500, which are based on Daimler Truck engine platforms. In addition, Deutz is taking over the service operations for engines that are already in service.

MTU Series 1000 through 1500 engine. (Illustration: Rolls-Royce Power Systems)

“As we evolve our strategy, we are also constantly analysing our product portfolio,” said Dr. Jörg Stratmann, CEO of Rolls-Royce’s Power Systems. “As a result, we will be concentrating largely on higher-powered systems in the off-highway engine sector, primarily from our in-house production. We have therefore decided to transfer our successful lower-power-range engines business, which uses Daimler technology, to a partner.”

The agreement relates to diesel engines and engine systems using Daimler technology which are developed and manufactured by Daimler Truck AG for Rolls-Royce Power Systems to its specifications and used mainly in agricultural vehicles and construction machinery.

Earlier this year, Deutz entered into a cooperation with Daimler Truck to develop and market medium- and heavy-duty engines (MDEG and HDEP platforms) in the off-highway segment, which is scheduled to begin in 2028. With the agreed takeover of the sales and service operations from Rolls-Royce Power Systems, Deutz is now taking over the marketing of the off-highway variants of these engines from 2024.

In addition, the agreement includes the distribution of the older MTU Classic series (Daimler Truck engine series OM900 and OM460).

“With the takeover of the sales and service operations from Rolls-Royce Power Systems, we are taking the next major step towards growth in our business with modern internal combustion engines”, said Deutz CEO Dr. Sebastian C. Schulte. “This is an important element that will help us play an active role in the consolidation of the market.”

The takeover is a continuation of Deutz’s Dual+ strategy, which the company said aims to boost the development of a green product portfolio and at the same time optimize and further develop conventional engines. When the strategy was presented in January 2023, the company said it intends to firmly establish Deutz among the top three independent drive manufacturers – including through acquisitions and cooperations.

“With the earlier access to the engine platforms, we can offer existing and potential customers a much better approach for the transition,” said Deutz CTO and CSO Dr. Ing. Markus Müller. “Customers gain planning security and we benefit from faster market access.”

After the conclusion of the agreement, Deutz said it expects additional revenue of around €300 million per year with an EBIT margin exceeding the current group margin. The expected purchase price for the engine portfolio is a high double-digit million Euro amount.

Following a final agreement, the closing – subject to regulatory approvals – is expected from mid-2024.