Fiat’s Commitment to Iveco – Unwavering Says CEO.

Commercial Motor
January 17, 2007

Asked about Fiat Group’s commitment to the total ownership of a medium and heavy duty truck manufacturer, CEO Sergio Marchionne responded that it was ‘unwavering’. In a move that may be designed to distance Iveco from any fallout from an abortive MAN-Scania merger, he argued that, amongst all of the Fiat units, 'Iveco has the highest profit potential on the upside and similar potential for sales on the upside.'Moreover, he reiterated previous comments suggesting that he sees no benefit from heavy equipment sector mergers - such as the possible Scania-MAN move - because the integration process is long and difficult.

Iveco is aiming for a trading profit margin of ten per cent by 2010 said CEO Paolo Monferino. The assertion, made prior to the publishing of Fiat Group’s full year results in late January, comes in the light of a reported year on year increase in margins of 2.1 per cent, with Iveco believed to have seen 2006 figures at around six per cent, up from 3.9 per cent in 2005. In 2007, the Italian OEM is aiming for a 7.9 per cent margin on sales of €9 billion – a similar figure to that achieved in 2006. Pointing to an order backlog of 46500 units at the end of 2006, Monferino suggested some confidence in the face of a mooted downturn for the heavy truck sector in 2007. However, he went on to say that should Eurozone GDP growth dip below 1.5 per cent, then the industry would mirror such a downturn. Beyond Europe, Monferino was bullish about prospects for Iveco’s nascent Chinese business, but, significantly, appeared to back pedal from previous apparent confidence about the Indian truck business. Questioned about the current and future status of an Iveco-Tata relationship – through the recently inked agreement between the Indian OEM and Fiat Group, he chose only to allude to the importance of pursuing profitable business. Monferino’s comment seem pessimistic in the light of those from his colleague, Alfredo Altavilla, who ws quoted in December as saying "We are open to entering the Indian market [for commercial vehicles]. We are talking to the Tata group." At present, there seems to be some agreement between the two OEMs for a joint Latin American strategy, but little else. Sergio Marchionne was somewhat more forthright. Fiat is interested in Iveco expanding in the US: “There is an argument that Iveco has all the attributes to be a US player. There is unexplored potential for Iveco in the US,” he said. Fiat has been monitoring the US market for 18 months, said Marchionne, but added that 2007 is likely to be a 'tough year' for the US suppliers, a fact underlined by recent comments made by Navistar's Chief Executive Officer, Dan Ustian, who reportedly signaled his company's willingness to negotiate a potential buyout during a conference call in late December 2006. There have been parallel rumours about a possible LCV deal between Fiat/Iveco and a US distributor over the past few months.

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Commercial Motor is the online presence for Commercial Motor magazine, the world’s oldest magazine dedicated to the commercial vehicle industry.

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