COMMENT: Absence from major markets leaves Iveco increasingly vulnerable

Iveco must quickly become as enthusiastic about developing major new markets as it is about the industry's switch away from diesel, suggests new Automotive World report

Iveco’s stand at the 2018 IAA Commercial Vehicles Show was a bold statement: the truck and bus manufacturer opted for a diesel-free stand at a show traditionally steeped in diesel technology. Electrification and natural gas dominated its Hanover display, backed by considerable optimism about the commercial vehicle (CV) industry’s ability to give up diesel, which Iveco Brand President Pierre Lahutte likened to giving up smoking: it’s difficult, but it can be done.

Bold statements make headlines, and get you noticed. And bold statements are just what is needed for a company the size of Iveco; in 2017, the truck and bus division of CNH Industrial sold just over 152,000 vehicles. Such volumes mean that in terms of >6t truck sales, the Iveco brand fails to make it into the world’s Top-15. The brand also sells vans below that weight, but here too it is smaller in volume terms than its competitors; Iveco’s focus is on products at the heavy end of the market, while its competitors sell vans over a much wider weight range.

Bold statements make headlines. And bold statements are just what is needed for a company the size of Iveco; in 2017, the truck and bus division of CNH Industrial sold just over 152,000 vehicles

A new Automotive World report examines Iveco’s strategy, production plans and prospects over the next five years. The report notes that the lack of any intention to expand into major new markets, such as India or North America, will put the manufacturer at a long-term disadvantage compared with truly global CV industry competitors such as Daimler and Volvo.

“Iveco has been left behind as its European peers, namely Daimler, Volvo and VW’s MAN and Scania, have expanded globally,” said report author Jonathan Storey. “In the absence of a transformational deal, it risks becoming a steadily smaller blip on the competitor radars of those peers.”

One way to ensure that blip on the radar remains visible and relevant is to make bold statements – but statements alone are not enough. A bold statement needs to be supported by a bold move, and taking a lead on the diesel-free trucking debate is a step in the right direction. All truck manufacturers are looking at alternatives to diesel; what is notable about Iveco’s posturing is the fact that, although it lays claim to a long tradition of alternative powertrain development, it relies on a small customer base that demands diesel; indeed, the fuel type accounts for 95% of Iveco’s sales.

The lack of any stated intention to expand into major new markets, such as India or North America, puts Iveco at a long-term disadvantage compared with truly global CV industry competitors such as Daimler and Volvo

Sustainability, then, underpins Iveco’s strategy, underlined by the success of the Stralis NP 460 natural gas truck which at the end of last year was voted ‘Sustainable Truck of the Year 2019’ in the Tractor category. Much of the truck maker’s efforts are on liquefied natural gas (LNG), which Lahutte believes will win out in the race for efficient long-haul trucking. Fuel-type selection will ultimately be application-specific, he believes, and electrification is best suited to city centre driving. The challenge for Iveco is to quickly convince its existing diesel-oriented customer base to switch to non-diesel options, because new technologies (and shareholders) require scale.

Over the next five years, the truck maker is expected to see a return to more favourable output results. Automotive World’s report sees Iveco coming back from an output low of just 92,000 units in 2009 to a recent-year high of 177,000 units, following an initial dip in the early part of the forecast period. Iveco’s return to these more substantial output volumes is impressive, given the state in which the manufacturer found itself a decade ago; nonetheless, it is notable that by the end of the report’s forecast period, Iveco’s output will still be significantly below the 209,000 units it built in the year before the global financial crisis, from which it has taken so long to recover.

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