Sales of light commercials grossing at from 2.8 to 6.5 tonnes look set to slide by a jaw-dropping 40 per cent during the first quarter of this year as the recession takes its toll says Andrea Bucci, Iveco’s UK marketing director. But the tidings aren’t all grim. Things are likely to improve during quarter two, Bucci believes, and the second half of the year is likely to be healthier than the first.
That’s why Iveco is postponing the UK launch of its Land Rover Defender-rivalling Massif 4x4 until almost the end of 2009. Originally it planned to introduce it at the British Commercial Vehicle Show in April, but the tough economic climate means that the show has been cancelled.
Among the target markets for Massif is the construction industry, which is flat on its back at present. While Massif should appear before next Christmas, the fancily-styled Campagnola version may not debut on this side of the Channel for sometime thereafter. “We’re not rushing into introducing it,” he remarks.
Iveco’s Daily — What Van? Van of the Year award winner in 2007 — is one of the most significant players at 2.8 to 6.5 tonnes. It’s a sector of the market that started 2008 11 per cent up, but finished it 7.8 per cent down.
“That represents a turnaround of almost 20 per cent,” remarks Bucci. At 147,531 units registrations were nonetheless the second-highest ever, exceeded only by 2007’s total of 160,080. Sales of lighter-weight vans grossing at from 2.8 to 3.49 tonnes fell by 12 per cent, while demand for 3.5-tonners declined by six per cent,” says Bucci.
Ford led the 2.8 to 6.5 tonne market again, selling well over twice the number of vehicles than second-placed player Mercedes-Benz, with Iveco occupying the number six slot with a 5.1 per cent share and 7,559 registrations. That compares with 8,516 sales in 2007 and a 5.3 per cent slice of the action, an 11.2 per cent drop in sales.
“This was mainly due to big volume buyers cancelling or postponing orders during the second half of the year due to the economic crisis,” Bucci says. “Shifting our focus to heavy trucks meant we took our eye off the ball so far as vans were concerned though,” he admits. “We did not do as well as we had hoped. “However, we moved two places up the 2.8-6.5 tonne league table, putting us ahead of our stablemate Fiat and fast-falling LDV,” he adds.
Iveco is not a major player at 2.8 to 3.49 tonnes and doesn’t pretend to be. Daily only really comes into its own at 3.5 tonnes and the 3.5 tonne sector shrank to 77,179 units in 2008 from a previous 82,125. “That’s not a complete disaster — it was still the second-biggest 3.5 tonne market ever — but for such an important sector it was a big disappointment,” Bucci observes.
He detects some interesting changes in that weight category. “While vans still account for more than 60 per cent of sales, operators are moving increasingly to chassis cab-based products,” he says. “They now represent 31.6 per cent of the sector, with tippers and dropsides growing to 16.5 per cent and Lutons and box bodies growing to eight per cent.” That can only benefit Daily, which is a chassis-based vehicle.
Ford led the sector, Mercedes-Benz came second, with Iveco taking third place and a 7.5 per cent slice of the action compared with 8.3 per cent in 2007. Its registrations slid by 15.2 per cent, from 6,853 to 5,813.
“We were held back by lower sales volumes in the contract hire and leasing industry and fell back more than the market did,” Bucci states. “As a consequence we want to widen our appeal to the retail sector, ie to small to medium-sized businesses; something that we will be focusing on during 2009.”
Iveco enjoyed a healthy performance at 3.51 to 6.5 tonnes, a market that expanded by 7.9 per cent in 2008 to 9,602 registrations from 8,900. It took the number two position, behind Ford, with an 18.1 per cent share compared with the previous year’s 17.5 per cent. Its registrations rose by 11.8 per cent, from 1,556 to 1,740.
Bucci believes the sector is becoming increasingly important as some operators of 7.5-tonners switch to big vans to reduce their carbon footprint. “It’s now only 66 units below the 7.5-tonne market,” he says.
It should perhaps be pointed out that the figures quoted by Iveco for this sector include motor homes and some minibuses and small coaches. Curiously enough, they do not include Iveco’s own minibuses; they’re badged and marketed by the company’s Irisbus bus and coach stablemate, which found homes for 282 of them in this weight category in 2008.
Turning to 7.5-tonners, in 2008 the market actually rose by 2.7 per cent, from 9,418 to 9,668 units; evidence that not everybody is shifting to big vans and that there are still plenty of people around with licences that entitle them to drive vehicles at this weight. It was nevertheless the second-lowest 7.5-tonne market for 14 years.
Iveco grabbed the number two slot yet again, with 1,995 sales and a 20.6 per cent share. That’s a fall of 7.8 per cent when compared with its 2007 performance — 2,614 sales and a 23 per cent share — but the manufacturer’s efforts were disrupted somewhat by the introduction of the new Eurocargo.
“It was extremely well received by dealers and operators alike, not least because it already meets the Euro 5 exhaust emission requirements and comes with the Eurotronic automated transmission as standard too,” Bucci says.
Daf led the sector once more, with a 35.4 per cent share — the company’s best-ever — and 3,426 registrations. Mercedes-Benz was number three and took a 12.8 per cent share with 1,236 sales, a 21 per cent drop in volume. Conversely, its stablemate Mitsubishi Fuso saw registration soar by 24.7 per cent, giving it a 6.4 per cent share with 620 registrations and fifth position. MAN was fourth, with an 11.6 per cent share and 1,123 sales.
The battering commercial vehicle sales are receiving is not deflecting Iveco from its much-heralded plan to take 15 per cent of the British van market at 3.5 tonnes and above — it has achieved 8.7 per cent to date — come 2013/2014.
It also intends to capture 30 per cent of the light to medium truck market by the same date — it has reached 19.4 per cent so far — and 15 per cent of the heavy truck market. To date it has won 5.9 per cent.
The credit crunch and the reluctance of banks to loan money even to sound businesses means that more and more of these projected sales are likely to be funded through Iveco’s finance arm for the foreseeable future. By the end of 2008 it was responsible for funding 19 per cent of all Dailys acquired on finance and that figure could increase this year. “Without a doubt 2009 will be challenging,” says Iveco’s UK managing director, Henk van Leuven. “But crises also create opportunities”.
Bucci can even see a positive aspect to the downswing. “As recently as the Hanover Commercial Vehicle Show last autumn manufacturers were talking about increasing existing production capacity and building new factories to meet demand,” he recalls. At least the downturn came early enough to stop those plans being implemented, he points out.
If they had been the commercial vehicle industry would have been in a really serious mess, with capacity way in excess of sales. “Look what’s happened to the car industry,” he remarks.
Oil may have fallen to $36 a barrel at the time of writing compared with a peak of $150 last year, but don’t be fooled warns Iveco’s UK product director, Martin Flach. As soon as the global economy begins to recover it will start to rise again, he predicts, and could reach a staggering $300 a barrel by 2015.
“I think that’s quite possible,” he observes. “Ultimately the cost of fuel is only going to go one way and that’s up.” This means that operators cannot afford to ignore environmentally-friendly alternative fuels that could also bring cost savings, he contends; and it’s an area where Iveco’s Daily offers plenty of possibilities.
Since the late 1990s Iveco has produced some 4,000 Dailys powered by compressed natural gas (cng), says Flach. One that can run on biogas produced from food waste is currently on trial with the London Borough of Camden in a project that also involves waste management specialist Veolia Environmental Services. Covering 60 miles a day and used for street cleansing, the Daily is refuelled at the council’s York Way depot; London’s first biogas refuelling station.
DHL is running 65 cng Dailys in the Netherlands while hybrid Dailys are on trial with Federal Express and TNT in Italy. “They’ll soon be on trial in the Benelux countries too, this time with Coca Cola,” Flach says.
In a further initiative, Iveco has developed a battery-powered Daily with a range of between over 40 and upwards of 80 miles between recharges depending on the battery pack chosen. That makes it suitable for stop-start city centre delivery work.
The mere fact that the 2009 British Commercial Vehicle Show has been cancelled really says it all. Things may be bad at the moment, but the market will recover, albeit slowly.