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Old 21st August 2011, 15:27   #1
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Default Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

Fiat is scouting for prospective buyers for its Iveco truck brand. The recent restructuring within the fiat group will facilitate the same. Discussions between the Italian giant and CV makers in Europe have been largely inconclusive. Iveco has a decent market share with its Daily\EuroCargo\Stralis range of trucks & Vans. Its reported that the business is not profitable (specially the Med & Heavy trucks) which is the key factor behind the decision to sell rather than a drop in demand or deterioration in brand value. That and Fiats attempt to focus on their pascar business and alliance with Chrysler.

At some levels one can draw a parallel between the current situation at Iveco and what JLR's was prior to the Tata takeover. JLR had good products, a strong brand name \ image (probably not a great market share though !) but wasnt profitable. But the story is completely different today at Jag and LR, post the Tata takeover.
Bearing this in mind could TML or or the Hinduja group potentially be the future owners of Iveco & script a similar plot?
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Old 22nd August 2011, 18:23   #2
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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Bearing this in mind could TML or or the Hinduja group potentially be the future owners of Iveco & script a similar plot?
Depends on what the brand is valued at and whether TML can afford it. TML got Daewoo truck division ultra cheap since the company was in liquidation. It paid a measely USD 104 million for it compared to USD 2 billion plus it had to forego for JLR.
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Old 22nd August 2011, 19:01   #3
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

I recall that the Fiat group was expecting about 11 billion Euros for the entire non pas car business ( including Ag (CNH), off highway, Industrial and trucks). If Tata is serious about its global truck ambition a buyout of an existing strategic player with a manufacturing, sourcing and distribution footprint in advanced markets may be the most effective option. Daewoo probably provided a shot in the Arm from a Technology perspective but with sales of just a few thousand units in Korea its hasn't really taken the Tata truck brand to an international platform. At least not yet.
And the point you make about the huge investment into JLR is valid - but looking at the fact that JLR is now booking record profit levels im just wondering if Tata can turn around a prestigious automotive brand at a global stage, could they not do the same with a truck brand - given their legacy with trucks & buses and their business footprint in Europe ?
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Old 22nd August 2011, 19:31   #4
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

If that is the case, Ratan Tata being a board member of FIAT Group, would have come to know about it a long time ago, and must have set things in motion already if he wanted to.

As of now, the financials of Tata Motors look pretty strong, and so do those of Tata Group. So, they definitely have the capability to buy. And there is already a good strong relationship between FIAT and Tata Motors. Tata already offers FIAT truck engines on its Prima range in Korean market and will use them on the high power trucks.

Overall, it would help cut down the time frame of Tata entering the European Commercial Vehicle sector by around half a decade. It would give access to a whole gamut of products of Iveco, trucks, buses, defence and other special application vehicles.

It would be a massive coup if Ashok Leyland were able to buy it, as Iveco is probably twice its size by revenue and is not exactly in doldrums. And the Hinduja Group does not have the financial might like the Tata Group to backstop the financial deal. On the other hand, it would be comparatively easy for Tata Motors, which is exactly opposite financial situation, being about 5 times larger than Iveco by revenue.

Last edited by julupani : 22nd August 2011 at 19:34.
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Old 22nd August 2011, 20:58   #5
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

Iveco sells approximately 200K commercial vehicles and about 450K commercial diesel engines across the globe. This makes it comparable to TML in size and scale. Turnover-wise TML is 6.something billion USD (including pascars) while Iveco is close to 10 billion - if memory serves me right.

There were some reports in the press about a year ago that the Tata group and Daimler were in talks with Fiat with regards to its Industrial business - of which Iveco is a part. Not many updates since then.
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Old 22nd August 2011, 21:53   #6
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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Iveco sells approximately 200K commercial vehicles and about 450K commercial diesel engines across the globe. This makes it comparable to TML in size and scale. Turnover-wise TML is 6.something billion USD (including pascars) while Iveco is close to 10 billion - if memory serves me right.

There were some reports in the press about a year ago that the Tata group and Daimler were in talks with Fiat with regards to its Industrial business - of which Iveco is a part. Not many updates since then.
First of all, Iveco deal is not likely to include engine licenses, which are held by a separate company called Fiat Powertrain Technologies. I dont think FIAT wants to lose that profitable part, which also happens to hold the rights to FIAT's MultiJet and MultiAir engines.

And where did you hear that Tata was 6 billion dollars?? Tata Motors made 2 billion dollars profit in the last financial year, from a total revenue of 27.6billion dollars global revenue. Tata's Commercial vehicle sales internationally are over half a million a year. And a similar number of passenger vehicles are also sold every year.

And the Iveco brand, excluding the Cursor engines it makes for FPT, probably has a revenue of about 5 billion dollars.
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Old 22nd August 2011, 22:53   #7
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

Can TM swap the Passenger Car Division and JLR with Fiat in return of Ivecco?. Oh! but Fiat need cash!.. Off late Volvo and VW are the consolidators of CV brands, so if at all Ivecco for sale, Volvo, VW group and Dialmer will be interested.
Julupani, AL as a company may not be financially sound, but Hinduja group is cash rich, recently read Hinduja group is ready for some acquisitions in automobile field, outside India..
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Old 22nd August 2011, 23:59   #8
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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First of all, Iveco deal is not likely to include engine licenses, which are held by a separate company called Fiat Powertrain Technologies. I dont think FIAT wants to lose that profitable part, which also happens to hold the rights to FIAT's MultiJet and MultiAir engines.


And the Iveco brand, excluding the Cursor engines it makes for FPT, probably has a revenue of about 5 billion dollars.
Thats the interesting part - FPT, since Jan 2011, has been split into FPT -industrial ( F series, Tector(NEF), Cursor & Vector) engines and FPT fiat ( rest of the high volume pascar engines). This makes it potentially easier for Fiat to hive the commercial engines business along with Iveco
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Old 23rd August 2011, 06:50   #9
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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Thats the interesting part - FPT, since Jan 2011, has been split into FPT -industrial ( F series, Tector(NEF), Cursor & Vector) engines and FPT fiat ( rest of the high volume pascar engines). This makes it potentially easier for Fiat to hive the commercial engines business along with Iveco
Yeah, I had heard about this, but still the engine business is too profitable to be hived off, and doesnt require the kind of attention actually selling commercial vehicles does.

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Can TM swap the Passenger Car Division and JLR with Fiat in return of Ivecco?. Oh! but Fiat need cash!.. Off late Volvo and VW are the consolidators of CV brands, so if at all Ivecco for sale, Volvo, VW group and Dialmer will be interested.
Julupani, AL as a company may not be financially sound, but Hinduja group is cash rich, recently read Hinduja group is ready for some acquisitions in automobile field, outside India..
Hinduja Group, cash rich enough to buy of a company worth a couple of billion dollars??? I dont see them having made any massive investments in their companies in recent times. Remember, this is not going to be some small little buy out. but a massive deal.

As for the European companies, I dont see them gaining enough worth from buying out Iveco. They dont really need what the Iveco brand will give them. The major thing which you are paying for is an established brand in Iveco, and some factories, neither of which any of the established brands have much use for. And its not like, Iveco is not doing well at all, and you are going to get it at dirt cheap prices.
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Old 25th August 2011, 14:45   #10
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

I guess the message coming out of fiat is that the Pascar business is more profitable than CVs and it makes sense for them exit CV and off highway segments to focus on it.

There was some degree of interest from Daimler. There is also a general interest in the Daily LCV platform from a couple of European OEs but Fiat will want get rid of Iveco in one go and not in bits and pieces.
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Old 4th September 2011, 16:45   #11
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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Tata's Commercial vehicle sales internationally are over half a million a year.
The figure you mention represents Tata's entire CV sales, international plus domestic. Some 85% of that is sold in India. International CV sales are about 75000 or so.
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Old 4th September 2011, 17:56   #12
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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The figure you mention represents Tata's entire CV sales, international plus domestic. Some 85% of that is sold in India. International CV sales are about 75000 or so.
Correct, almost exactly.

Last financial year, I think CV exports were close to 60,000 units. Tata Daewoo manages about 9 thousand units sale every year, while Tata Hispano manages about 500 units a year.

So total sales outside India were close to 70,000 units last year.
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Old 5th September 2011, 14:30   #13
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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Originally Posted by julupani View Post
Correct, almost exactly.

Last financial year, I think CV exports were close to 60,000 units. Tata Daewoo manages about 9 thousand units sale every year, while Tata Hispano manages about 500 units a year.

So total sales outside India were close to 70,000 units last year.
You also need to add the sales of Tata Motors Thailand Ltd. which were a little over 6000 last year.
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Old 5th September 2011, 14:47   #14
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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You also need to add the sales of Tata Motors Thailand Ltd. which were a little over 6000 last year.
I think Tata Motors Thailand is not a separate company, but just assembles a few of the vehicles that are exported from India. Similarly there is an assembly plant of Tata Motors is South Africa now and in a few years time one in Myanmar.

But the units sold by these companies are effectively vehicles exported from India, and not made in Thailand or South Africa.
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Old 5th September 2011, 15:12   #15
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Default Re: Fiat likely to sell its Iveco Truck brand - Could\Should TML or Hindujas buy?

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I think Tata Motors Thailand is not a separate company
Well it is. Didn't you notice the word "Ltd." in its name? It's a JV in collaboration with the local Thonburi group which earlier had an association with Daimler Benz.

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but just assembles a few of the vehicles that are exported from India.
The local content in Thai-made Xenons is supposed to be quite high due to Thailand having an excellent supplier base, being the world's second largest pick-up market (4,50,000 units annually). Please check this report:

Tata Group | Tata Motors | Media releases | Tata launches Xenon pickup=

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Originally Posted by julupani View Post
Similarly there is an assembly plant of Tata Motors is South Africa now and in a few years time one in Myanmar.But the units sold by these companies are effectively vehicles exported from India, and not made in Thailand or South Africa.
TML's annual report shows the sales of Tata Motors Thailand Ltd. separately from TML's own exports, just like the sales of Tata Daewoo and Tata Hispano are shown.
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