Rising Diesel Prices Helped to Spark Fallbrook’s Hodyon Acquisition

3/7/11Follow @bvbigelow

San Diego’s Fallbrook Technologies, which has spent more than a decade developing technology for a more fuel-efficient, continuously variable transmission, says today it has acquired Hodyon, a Texas-based maker of auxillary power systems for trucks.

Financial terms were not disclosed, but Fallbrook CEO Bill Klehm called me from Europe to explain the logic of the deal, which has a lot to do with soaring diesel fuel prices. Diesel fuel gained more than 14 cents a gallon, to a nationwide average of $3.72 a gallon ($3.96 a gallon in California), during the last week of February, according to the most recent survey data available at the U.S. Energy Information Administration.

“It’s a perfect way to display our technology, save truckers money, and improve fuel economy,” says Klehm.

Fallbrook has been working for more than a year with Hodyon, which is based near Austin in Round Rock, TX, on joint development of a new air conditioner compressor for medium and heavy-duty vehicles. The Texas company, which has 28 employees, will operate as a Fallbrook subsidiary.

When Fallbrook filed for its IPO more than a year ago (Klehm would not comment on the IPO, which remains active) the company identified automotive accessory drives, such as alternators and air conditioners as a key market, with estimated sales of $2.4 billion a year. Fallbrook’s proprietary transmission enables such drives to maintain an optimal operating speed regardless of whether the truck’s main engine is increasing or decreasing RPMs. It means a garbage truck driver wouldn’t have to rev up the engine to operate the motor that picks up curbside trashcans and dumpsters.

“We improve dramatically the fuel consumption of these devices,” Klehm says. Of the 800,000 long-haul trucks in the U.S., he estimates a third are driven by independent owner-operators who count their profits by the penny per mile, and they are especially keen to find new ways to operate more efficiently. Klehm also says 23 states currently have anti-idling regulations for trucks, and he predicts that number is only going to increase.

In a statement from the companies, Hodyon CEO David Hancock says, “The combination of Fallbrook’s NuVinci continuously variable accessory drive with Hodyon’s Dynasys APU will allow us to serve the transportation industry with products that provide real environmental change through the reduction of fossil fuel and energy consumption.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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