Is Caterpillar "fueling" the market

11/23/2015 8:46:23 AM by Christie Collins

Caterpillar announced earlier this year they are extending the "Cat pays you back" program until June 2016. A customer would receive $1 on every gallon that goes over the fuel consumption rate stated for a particular machine. Caterpillar will track for three years or 5,000 miles through their Cat Product Link. The results will be emailed out quarterly than paid out at the end of the year through a Cat Financial Commercial Account Card. According to their reports it has been a highly successful program, especially with bringing in new Cat customers. The program is a self-enroll incentive and more than half of new machines bought have been enrolled.

With fuel being one of the largest expenses related to equipment, and with Caterpillar's new machine sales down, will this be enough to help bring them out of their slump? Caterpillar is hoping this will be incentive enough to persuade customers to buy a new Cat machine despite the higher overall operating cost of a new machine.

There is only one other company that offers a fuel efficiency guarantee, Volvo, but with companies like Case, Komatsu and John Deere that cover much of Caterpillars product line at a lower overall cost, Caterpillar is taking a gamble that this be enough to maintain their dominance in the industry.

Fuel programs like these should be a standard for all heavy equipment manufacturers, even if they don't offer the same payback rate. Although with tier 4 and eco models making their way into the marketplace, these programs may not even be necessary in the future.

Caterpillar should focus on making their equipment more fuel efficient in the first place so they wouldn't have to budget for a huge payout when machines go over the set standard fuel burn rate. Maybe then this would justify the higher cost of their machines.