Tata Motors plans local assembly of Iveco vehicles, eyes global expansion

Chandrasekaran sees scope for component sourcing and taking Tata products overseas as the combined Tata Motors-Iveco group targets higher volumes, revenue and margins over five years

Tata Motors is exploring the local assembly of select vehicles of the Iveco group in India, initially through the semi-knocked-down (SKD) route, as the two companies begin identifying opportunities to introduce products across each other’s markets following the Indian automaker’s acquisition of an 89.42 per cent stake in the European commercial vehicle major for approximately €3.4 billion.

 

Speaking at a global press conference in Turin, Italy, on Tuesday, Tata Sons Chairman N Chandrasekaran said the companies had complementary product portfolios, creating opportunities for growth in India and overseas markets.

 

Responding to a Business Standard question on whether India could emerge as a manufacturing or component sourcing hub for Iveco’s global operations, Chandrasekaran said: “There are specific products of the Iveco group which will have a lot of relevance in India. And we are already identifying those products. Obviously, those products will have to be localised in India, at least to start with in a semi knockdown manufacturing.” He added that Tata Motors’ products and platforms could also be introduced in markets where Iveco had an established presence. “Obviously, there are opportunities in the areas of components, batteries and many other areas. These are things to be worked on,” he said.

  

The press conference, attended by journalists from several countries in person and through a live stream, came days after Tata Motors acquired the controlling stake in Iveco through the initial settlement of its tender offer on October 30, bringing the Italian-headquartered company under its control.

 

Growth over five years

 

The acquisition has created the world’s fourth-largest commercial vehicle manufacturer by truck sales volumes in the above-six-tonne segment, with annual revenue of approximately €21 billion and combined sales volumes of around 590,000 vehicles. The group operates in more than 130 countries, with 27 manufacturing sites, 25 research and development centres and over 73,000 employees.

 

Chandrasekaran said the combined company expected higher vehicle volumes, revenue and profitability over the next five years, although he stopped short of providing numerical targets. “We see the volumes increasing over the next five years, and we see the revenues significantly increasing, also the margin profile increasing,” he said, adding that the management teams would share detailed business plans subsequently.

 

He stressed that the transaction should not be viewed as a consolidation exercise. Instead, the companies would seek to combine their technological capabilities, research investments and geographical strengths to develop new products and expand into additional markets.

 

FPT engines, overseas markets

 

One area of collaboration will be powertrains, where Iveco’s FPT Industrial business could open up new opportunities for Tata Motors. FPT manufactures engines and powertrain systems for commercial vehicles, agricultural machinery, construction equipment and marine applications.

 

“We truly believe that FPT is a jewel in the entire Iveco Group,” Tata Motors Managing Director and CEO Girish Wagh said, pointing to its technology capabilities, product portfolio and longstanding customer relationships. Wagh said Tata Motors would continue leveraging its more than 30-year-old joint venture with Cummins, which supplies engines for its heavy commercial vehicles in India. However, FPT’s capabilities could be used across other segments of Tata Motors’ portfolio, which he said was three times the size of its heavy commercial vehicle business.

 

The opportunities extend beyond vehicles to industrial applications in India, Africa and ASEAN markets, where Tata Motors already has a presence and distribution network. The companies also see opportunities to expand their reach by using each other’s established distribution networks. Latin America, where Iveco has a strong presence, could be among the first markets to benefit from this approach.

 

Wagh said Tata Motors could leverage Iveco’s dealer and retail financing network in the region to introduce new products. The combined company has approximately 9,300 sales and service outlets globally, providing a wider distribution network for both businesses.

 

“Keep a watch for some new products coming into Latin America,” Wagh said, indicating that the companies would examine opportunities as they develop joint strategic plans.

 

Italian factories and investments

 

While the companies look to expand their presence in new markets, management also sought to reassure stakeholders about the future of Iveco’s existing manufacturing operations in Europe.

 

Iveco Group CEO Olof Persson said previously announced investments in Italian manufacturing facilities remained on track, including projects at Foggia, Brescia and Turin. The investments, linked to preparations for upcoming vehicle model years, were already underway. He confirmed that Iveco’s headquarters would remain in Turin, which would continue to play an important role in manufacturing, engineering, software development and decarbonisation technologies.

 

The Italian city also has a longstanding connection with Tata Motors. Wagh recalled that when former chairman Ratan Tata decided to develop the company’s first indigenous passenger car, he turned to Turin’s automotive design expertise.“When our ex-chairman Mr. Ratan Tata decided that Tata Motors will develop and manufacture its indigenous car, passenger car, he actually turned to Turin,” Wagh said. The Tata Indica subsequently took shape at the Turin-based design house I.DE.A in the late 1990s. “We owe it to Turin for our passenger car business because it was kind of born here,” Wagh said.

 

The commitment to retaining Iveco’s existing industrial capabilities extends to other European markets as well. Asked about the future of its Spanish manufacturing facilities and employment, Chandrasekaran said it was too early to specify investments at individual plants.

 

However, he emphasised that the acquisition was intended to drive growth rather than consolidate operations. The companies would assess the capabilities of their manufacturing locations and examine how these could support products for both domestic and international markets, he said.

 

Minority buyout continues

 

The announcements come as Tata Motors continues the process of acquiring Iveco’s remaining shares and moving towards delisting the company.

 

The transaction had faced opposition from some minority shareholders over valuation, including activist investor Petrus Advisers. Tata Motors subsequently increased its offer price from €14.10 to €14.40 per share.

 

With approximately 10.58 percent of Iveco’s common share capital, excluding treasury shares, remaining outside Tata Motors’ ownership following the initial settlement, the tender offer reopened on November 2 and will close on November 6. Settlement for shares tendered during this period is scheduled for November 13.

 

The company is also working towards delisting Iveco. Management said at the press conference that the process was being pursued but declined to specify a timeline.