Unstoppable

Interview by Gianenrico Griffini

 

How are you translating CNH Industrial’s Transform2Win strategy into reality?

Despite the unprecedented situation that we find ourselves into, the strategy remains valid. It is aligned with our long-term goal. The timeline may change a little here or there, but the strategy remains valid. It is about CNH Industrial working on the design of the new business after the spin-off. It is about structures and processes. Our focus may have temporarily shifted to crisis management, but the strategy remains in place and we are proceeding with it. To be precise, from an Iveco stand point, the Transform2Win strategy marks the evolution of our product portfolio; of it being on track and moving. As part of the strategy, we have achieved some interesting milestones in just one year. In April, we introduced the new Daily. It is now even better with advanced driver assistance systems and connectivity. In July, we launched the S-Way, which is truly designed around the customers’ needs. At the end of last year, we announced cooperation with Nikola on hydrogen and battery electric trucks. In just three months of announcing the cooperation, we presented a prototype. Later this year, we will launch the T-Way, our off-road vehicle

(and Trakker successor). By the end of the year we will have a completely renewed product portfolio across all segments.

 

But then, the Tranform2Win strategy has another part to it, is it not?

Yes, there is another part of our strategy. It is about renovation and reorganisation of our entire service network. We want it to align itself with the repositioning of our heavy-duty line. We have established a network of dedicated heavy-duty truck stations across Europe to deliver a highly professional service to our customers. To ensure that their vehicle enjoy maximum up-time, we are also continuing to look at our quality situation, which has dramatically improved. In our quantum leap in connectivity, which will play a key role in how we will provide our customers with the best TCO and fleet management capabilities into the future, we now have state-of-the-art infrastructure and product line-up. Launching additional connectivity features over time, we want to continuously raise the bar on customer benefits. Key to our Transform2Win strategy is the creation of an on-highway company that would focus on trucks and powertrains.

 

So the priority is to focus better on on-highway products and powertrains? On products like the S-Way?

Yes. The feedback we are receiving from our customers about the S-Way tells us that our prioritising is working fine. Our customers are noticing a change in our heavy-duty proposition. Large fleet customers who had moved to other brands are now coming back to us. They are not only coming to like the IVECO S-Way, its product concept, cabin and looks, they are also coming to like the fact that the vehicle comes from a leading LNG technology company. It reflects our pioneering of LNG technology for the past 20 years. The drivers too have come to appreciate the S-Way. Our record says that in the first three months of 2020, we increased market share in Europe by two-per cent. In a highly competitive segment, it amounts to a remarkable achievement. And, the S-Way is yet in the launch phase.

 

If the S-Way reflects your LNG technology, how are you shaping it to your benefit?

Our second-generation LNG vehicle is on its way. It will announce further technological improvement in the form of the Stralis (LNG). In later 2020, we will also launch the right-hand version. Completing the public launch of the S-Way before the Covid-19 crisis fortunately, we are looking at how and when the dealers are able to reopen their showrooms. We want our customers and drivers to come and experience first-hand our new products.

 

What about bio-LNG?

We believe that bio-LNG will be the rocket launcher to reach the moon. It is the only available zero-emission alternative currently on the market. In the last two years we have seen roughly 2.5 per cent of the heavy-duty market make the transition to LNG technology. It would increase to 5 per cent in the medium term and 10 per cent over the next 10 years. The enabler for this growth is the expanding LNG fueling infrastructure across Europe. Today there are about 217 stations, and the plan is for an increase to between 450 and 480 stations. In the 10-year time span, heavy-duty truck operators will have more choice. It will not be limited to just diesel, hydrogen or LNG, but would include different other solutions to address different customer applications and needs. It would also be about the need to achieve the right energy balance, often unique to the thoughts and requirements of different countries and markets.

 

What about electric?

Pure electric trucks will account for a small segment and hydrogen will play an important role. There will be a market for LNG too. It is not just an intermediate solution, but will continue to be a valid alternative with an interesting economic proposition. When it comes to the market, bio-LNG will make a huge difference. In the last six months we have seen energy companies make announcements regarding this. Shell has declared their plans for bio-LNG, which would account for up to 30 per cent of their LNG supply. Interestingly, many customers have developed their own bio-LNG sources. The number of small bio-LNG producers in Italy, Spain and Germany is growing. It is providing customers with an opportunity to operate their vehicles on bio-LNG and generate 95 per cent less emissions than diesel in the process. All this at the same cost. For companies like Lidl and Carrefour this makes a big difference. For beverage producers as well. Many of them are joining with a need to extend their green fleets. They are finding out that bio-LNG is the only solution that addresses their needs as of now.

 

How are you projecting LNG advantage versus diesel?

We are coming to observe that we don’t need to convince our customers about the environmental and economic advantages of natural gas. They are already knowing them. It is therefore that they are coming to us. We expect the transition to alternate fuels like LNG to accelerate post Covid-19. It would give us an opportunity to invest in technology and processes for the future. We are working with automotive associations and governments to ensure scope for various new technologies. At the end of 2020, we will, with that in mind, extend our portfolio in cooperation with Nikola. We will launch an electric truck and follow it up with a hydrogen version.

 

How do you look at Iveco’s journey over the last one year?

We sold 125,000 vehicles, of which roughly 100,000 were in Europe. We did very well in the Daily segment. We have been a market leader in that respective segment for the past 40 years. Our market share has been around 12 per cent on an average. Overall, we did very well.

 

How do you look at the post Covid-19 scenario?

Post COVID -19, we expect a change in customer behavior in a way where they make more use of the internet; are more willingly towards digitisation. In a scenario like this, our Daily is very well positioned. It employs advanced connectivity and related services. Expecting last mile delivery markets in the segment to make a quick comeback, we are positioning ourselves at the right places. Expected to maintain its position in the special applications category under the public services and military environment portfolio, our Eurocargo is an excellent product. It is highly versatile. In the post Covid-19 environment, our success will also depend on the S-Way and T-Way. We have a six-per cent share of the heavy-duty market. In fact, we touched eight-per cent in February this year. A turnaround year 2019 was for Iveco. The year 2020 should hopefully help accelerate as we come out of the Covid-19 situation. I am looking forward to the time when we launch the T-Way later this year.

 

How are you looking at the overall situation as the market comes out of the Covid-19 situation?

Much would depend on the course of the infection clearly. We hope that the effects would be short-term. We expect the market to go down roughly 30 to 35 per cent against last year. We expect a good recovery after all the governmental packages come to the table. We are clearly not expecting to once again witness the situation that happened in 2009 with the Lehman shock. The banking system is in good order and governments are reacting faster. As a company we have learned a lot from the last crisis.

 

How did Iveco support its customers in the Covid-19 situation?

Our customers suffered. They have to deal with difficult challenges, including health and safety obligations, drivers’ exposure as they drove through European countries touched by the pandemic and border controls. We did and continue to do all that we can to stay close to our customers; to encourage them. We are very proud of our truck drivers, and the mechanics who kept their workshops open even during the Covid-19 crisis. We thank each and every person out there, working on the front line and doing their job during these very challenging times. Working closely with our European Dealers Association, Gacie, to make sure that our dealers have the funds to get through this crisis, we have come to observe varying situations across countries and markets. We have come to observe different governmental regulations as well. We are therefore looking at solutions that are country and market specific. Being there with our customers and our partners in these difficult times, we want to be a great brand.

 

How important are connectivity and the related advanced service offer for Iveco as a brand?

We have always made efforts to think from the customer’s perspective. This would help us to address their needs for most uptime and lower operating costs. We feel that professional and high-quality services and connectivity will enable us to partner with our customers and understanding their needs better. We have spent the last 18 months to completely overhaul the entire communication infrastructure on our vehicles therefore. We are now better placed to offer state-of-the-art technologies and services like flexible maintenance and repair contracts that add more value. We have also introduced fuel advising to help customers reduce their consumption. Our customers can now understand their driver behaviour better, and how it is influencing their business.

 

How do see the Nikola cooperation moving beyond the launch of two new products?

We are working with our American partners and expect to begin product testing later this year. The production location of Nikola Tre in Europe will be Ulm, Germany. It is right in the heart of the European supplier hot spot for hydrogen. It is in a state that is very supportive. An additional advantage is that we have a large part of our heavy-duty vehicle development team in Ulm as well. Working on the technical development of the vehicle, we are at an advanced stage. We are on schedule to have the electric version of the Nikola Tre in 2021 and the fuel cell version in 2023.

 

Would both the vehicles be sold by the IVECO sales network?

Yes. We are confident that the sale of both the vehicles – electric and fuel cell, by the Iveco sales network will receive a positive reaction. We are two partners with significant synergies. As a market leader in fuel cell technology for trucks we are of the opinion that we have found a partner that has a unique technological edge. We, at the other end, are looking at leveraging our 45 years’ experience in producing, running and testing heavy-duty trucks in Europe.