The landmark deal by Tata Motors to acquire Italian MNC Iveco is expected to shape Tata Motors’ global commercial vehicle (CV) strategy, with greater presence in international markets, and access to clean energy powertrains, besides a powerful brand in the CV category.
Shares of Tata Motors are off early lows, still down over 0.5 percent on July 31 as of 10:00am, following a sharp fall a day before, weighed down by investors' concern around the acquisition.
Iveco's trucks have 11 percent market share in EU and Latin America, while its the second largest bus manufacturer in Europe. In powertrain and engines, Iveco is the fifth largest maker in the world. The company which is rooted in Europe has core revenues and production coming in from across the world, which will be a significant expansion of Tata Motors' footprint in the CV business. While Europe accounts for 75 percent of the industrial revenue for Iveco, the company has a manufacturing as well as R&D presence in South America, with 12 percent revenue contribution. Iveco's trucks are a market leader in the LCV category, and the company has a growing traction in HCVs, with new launches in the electric platform. This multi-energy portfolio covering all segments is being positioned by Tata Motors are a big draw.
The development comes as Tata Motors is progressing towards a demerger to separate commercial and passenger vehicle businesses by March 2026. "This is a logical next step following the demerger of the Tata Motors Commercial Vehicle business and will allow the combined group to compete on a truly global basis with two strategic home markets in India and Europe. The combined group's complementary businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and concluding the transaction in the coming months," N Chandrasekaran, Chairman of Tata Motors said.
The acquisition of Iveco’s truck operations offers Tata Motors a place in Europe’s CV sector and boosts presence in a sizeable market. Olof Persson, CEO of Iveco Group said, "By joining forces with Tata Motors, we are unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero-emission transport, and expand our reach in key global markets."
Tata Motors will also gain access to advanced electric and hydrogen powertrains, likely accelerating its clean mobility transition. Iveco is a leader in a vast range of advanced powertrain technologies in agriculture, construction, and commercial vehicles sectors.
Girish Wagh, Executive Director of Tata Motors called the deal a 'strategic leap forward' in the ambition to build a 'future-ready commercial vehicle ecosystem'.
The deal will see a continuation of the Iveco brand, with Tata Motors maintaining the corporate identity, as well as key brands and logos, positioning Tata Motors as a global CV powerhouse that can be comparable to Daimler Truck and Volvo. Iveco has been a strong 4 in European heavy truck sales with a 13% share, trailing Daimler (Mercedes), Volvo, and Scania.
Renault Trucks, Volvo's subsidiary, reported 2024 revenue of €6.42 billion, Daimler Truck's 2024 group revenue was around €54.1 billion, while Iveco reported consolidated revenue of €15.29 billion last year.
Together, Iveco and Tata Motors' commercial vehicle business will have combined revenue of €22 billion (Rs 2.20 lakh crore) across Europe (50%), India (35%) and the Americas (15%).
The combined entity now boasts of a broader range of trucks, buses, and commercial vehicles, enhancing competitiveness, as well as new efficiencies in manufacturing, R&D, and supply chains.
Italy's Iveco Group is breaking itself up to selling the defense unit to Leonardo, and the rest of the business to Tata Motors. The offer aims to acquire 100% of Iveco's shares with a subsequent delisting from Euronext Milan. This is the first major deal by Tata Motors nearly two decades after its purchase of Jaguar Land Rover in 2008.
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