HIGHLIGHTS (E million) 2009 2008(1) Net revenues 7,183 10,894 Trading profit/(loss) 105 838 Operating profit/(loss) (*) (90) 779 Investments in tangible and intangible assets (**) 217 367 of which capitalised R&D costs 84 120 Total R&D expenditure (***) 169 246 No. of employees at year end (****) 24,917 27,108
(1) Following adoption of the improvement to IAS 16 in 2009, as described in the Notes to the Consolidated Financial Statements, 2008 net revenues were increased by €126 million and investments in tangible and intangible assets were reduced by €59 million. (*) Including restructuring costs and other unusual income/(expense).
(**) Net of vehicles sold under buy-back commitments and leased.
(***) Includes capitalised R&D and R&D charged directly to the income statement.
(****) Excludes employees of the powertrain businesses transferred to FPT (7,685 at year-end 2009 and 8,335 at year-end 2008).
COMMERCIAL PERFORMANCE
In 2009, demand for commercial vehicles (Gross Vehicle Weight or “GVW” >_ 2.8 tonnes) in Western Europe fell 34.6% over 2008 to 765,162 units, with significant declines in all major markets: Spain (-51.7%), the UK (-40.6%), Italy (-33.6%), France (-30.0%) and Germany (-28.5%).
The light segment (GVW 2.8-6 tonnes) fell 31.7% over 2008. Significant decreases were recorded in Spain (-45.3%), the UK (-39.9%), Italy (-29.4%) and France (-27.1%) and, to a lesser extent, Germany (-23.1%). Demand in the medium segment (GVW 6.1-15.9 tonnes) fell 33.1% over 2008, with declines in all major markets: Spain (-49.5%), the UK (-37.2%), Germany (-32.9%), Italy (-26.9%) and France (-26.5%).
The heavy segment (GVW >_ 16 tonnes) experienced the largest drop in demand for the year (-44.1%). Particularly large decreases were recorded in Spain (-66.7%) and Italy (-50.5%). Germany, the UK and France closed the year with declines in excess of 40% (-41.6%, -44.7% and -40.2% respectively).
For Eastern Europe (GVW >_ 2.8 tonnes), market demand totalled 69,669 units for 2009, a fall of 53.4% with significant declines recorded in all three segments. Demand was down 43.8% in the light segment (GVW 2.8-6 tonnes) and 55.5% in the medium segment (GVW 6.1-15.9 tonnes). The sharpest decline, however, was in the heavy segment (GVW >_ 16 tonnes), which was down 69.7%.
Demand for buses in Western Europe totalled 35,000 units, decreasing 11% over 2008 driven by falls in both the Minibus and Truck Derived segment (-20%) and the Intercity & Coach segment (-15%), which were only partially offset by growth in the City segment (+5%). Demand for buses was down in all Western European markets with the exception of France, where it remained broadly stable.
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Iveco’s market share in Western Europe (GVW >_ 2.8 tonnes) was 9.2% (down 0.7 percentage points vs. 2008). Share in the light segment (7.9%) was down 0.5 percentage points overall, heavily influenced by the performance in France, but up in Italy and Spain (+0.4 percentage points and +0.8 percentage points, respectively). Share for the medium segment decreased 0.7 percentage points to 24.2%, despite the share gains achieved in Italy and France. In the heavy segment, Iveco’s share was 9.3%, representing a decline of 1.1 percentage points, attributable entirely to an unfavourable market mix, which more than offset the positive performance in Italy (+0.6 percentage points), France (+0.4 percentage points) and Spain (+2.7 percentage points).
In Eastern Europe, Iveco’s market share for 2009 (GVW >_ 2.8 tonnes) was 10.7% (down 1.1 percentage points vs. 2008), with falls in both the light vehicle segment (-0.9 percentage points) and the medium vehicle segment (-3.3 percentage points). Share of the heavy vehicle segment was in line with 2008.
Iveco Irisbus’ market share of 18.3% in Western Europe was substantially in line with 2008. The reductions experienced in France and Italy, where Iveco nevertheless maintained its position as market leader, were offset by significant growth in Germany and the Scandinavian countries.
In 2009, Iveco delivered a total of 103,866 vehicles, representing a 45.9% decrease over the prior year. In Western Europe, 66,754 vehicles were delivered (down 46.7%), with decreases experienced in all principal markets, in particular: the UK (-73.1%), Spain (-60.3%), France (-45.9%), Germany (-43.3%) and Italy (-30.7%). The sharpest decline was in the heavy segment, which plummeted 61.9% over the previous year, while light and medium vehicles fell by 41.9% and 40.8%, respectively. In Eastern Europe, deliveries contracted 72.6%. The decline was less marked in the Latin American markets where Iveco offers its full range of vehicles: 17,001 units were sold in 2009, down 19.1% over the 21,012 figure for 2008.
Iveco delivered a total of 7,771 buses during the year, an 18.7% decline from 2008.
Commercial Vehicle Market (GVW >− 2.8 tonnes)
(units in thousands) 2009 2008 % change France 155.1 221.5 -30.0 Germany 197.6 276.5 -28.5 UK 116.1 195.4 -40.6 Italy 83.1 125.1 -33.6 Spain 41.7 86.5 -51.7 Rest of Western Europe 171.6 264.8 -35.2
Western Europe 765.2 1,169.8 -34.6
Commercial Vehicle Market by product (GVW >− 2.8 tonnes)
(units in thousands) 2009 2008 % change Heavy 149.5 267.4 -44.1 Medium 49.2 73.5 -33.1 Light 566.5 828.9 -31.7
In China, Naveco - the 50/50 joint venture with Nanjing Automotive Corporation (NAC), a subsidiary of the SAIC Group - sold 25,037 light vehicles in the Power Daily range (up 12.7% over 2008) and 50,670 medium vehicles in the Yuejin range (up 37.8% over 2008).
In 2009, SAIC Iveco Hongyan Commercial Vehicles Co. Ltd., held 33.5% by Iveco, sold 19,598 heavy commercial vehicles, representing a 12.3% decline over the previous year.
Including LSVs (for agricultural use), these two joint ventures sold a total of 107,000 units, up from 92,000 in 2008.
In Russia, no further investment was made in the joint venture between Iveco and the industrial group Samotlor- NN due to the global recession (which was particularly harsh in Eastern Europe) and its severe repercussions on our partner’s financial stability.
INNOVATION AND PRODUCTS
Innovation continued, as in previous years, with both product- and methodology-focused initiatives geared toward sustainable mobility.
Product innovation centred around six key elements: new-generation low environmental impact vehicles, best-in-class fuel efficiency, high-quality cabin environment, cost-effective solutions for frames, excellence in preventive safety and the evolution of telematic capabilities.
Innovation in methodology focused on the following key areas: product development processes, virtual analysis, performance measurement and control, product-process integration and the upgrading of technical standards.
In 2009, Iveco continued to seek innovative technological solutions to both lowering emissions – an area in which Iveco has always been an innovator – and improving fuel efficiency.
The line of CNG-powered vehicles was expanded and all vehicles in this range comply with the strictest European emissions regulations, well in advance of the regulatory deadline. Iveco is the only manufacturer of trucks and commercial vehicles in the world today to offer a complete range of low environmental impact vehicles which run on alternative fuels.
During the year, investment also continued in the development of diesel-electric hybrid technology. Of note was the continuation of road testing, in collaboration with major international customers, of the diesel-electric hybrid Daily (minibus and van versions) and, in the medium segment, the diesel-electric hybrid Eurocargo, the first European vehicle of its type and size designed for urban use. Iveco’s latest generation of hybrid technology offers up to 30% fuel savings for urban use and a consequent reduction in CO2 emissions through the application of sophisticated operating and control systems which optimise propulsion systems for urban driving conditions.
Iveco is also actively testing alternative fuels and next-generation lubricants. In particular, current research relates to two lines of biofuels – one derived from vegetable oils and not disruptive to the food chain, and the other based on biomass – as well as the new, synthetic low and ultra-low viscosity lubricants with low ash content, which aid in reducing fuel consumption and carbon dioxide emissions, and improving compatibility with particulate filters. This latter area of research led to development of a new low-viscosity (SAE 5W30) and low ash content (LowSAPs) motor oil for F1 engines which went into production in 2009.
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In 2009, Iveco completed a major phase of renewal and expansion of the product range, which saw the launch of 12 new models over a period of 3 years – one new product every three months – as part of its programme of continuous improvements in performance, as well as the technological and environmental quality of the product range.
In March, the new Genlyon, the first result of the joint venture between SAIC and Iveco, was unveiled in Beijing. This new heavy vehicle manufactured by SAIC Iveco Hongyan Commercial Vehicles (SIH) was designed and developed in China and brings Iveco’s technological excellence and European quality standards to the Chinese market.
In June, Iveco launched the EcoDaily, the latest evolution of a model that has sold over 2 million vehicles to date. The vehicle has a new look and new range of engines and enhancements to comfort and on-board electronics. The strong points of the EcoDaily are two diesel engines that comply with the strict EEV (Enhanced Environmentally-friendly Vehicle) standard, a bifuel CNG/gasoline engine and an electric engine.
Sales Performance
Commercial Vehicles by country
(units in thousands) 2009 2008 % change France 15.0 27.6 -45.9 Germany 11.1 19.6 -43.3 UK 3.7 13.8 -73.1 Italy 21.7 31.3 -30.7 Spain 5.3 13.3 -60.3 Rest of Western Europe 10.0 19.6 -48.9
Western Europe 66.8 125.2 -46.7
Eastern Europe 8.1 29.5 -72.6 Rest of the World 29.0 37.4 -22.6
Total Sales 103.9 192.1 -45.9
Naveco 75.7 58.9 28.4 SAIC Iveco Hongyan 19.6 22.3 -12.3
Grand Total 199.2 273.3 -27.1
Sales Performance
Commercial Vehicles by product
(units in thousands) 2009 2008 % change Heavy 22.1 57.9 -61.9 Medium 12.0 20.2 -40.8 Light 57.4 98.9 -41.9 Buses 7.8 9.6 -18.7 Special-use vehicles (*) 4.6 5.5 -17.3 Total Sales 103.9 192.1 -45.9
In September, Iveco presented a prototype of the Daily Electric in Brazil. The project was the result of a partnership between Iveco and Itaipu Binacional, the company that manages the largest hydro-electric power plant in the world on the border between Brazil and Paraguay. The prototype is the first zero-emission light commercial vehicle produced in Latin America.
Also in September, Iveco unveiled the Magelys HDH, the latest addition to the Iveco Irisbus Gran Turismo range. This innovative and comfortable triple-axle bus is the real jewel in the crown of the fleet.
In October, Iveco presented the new medium Vertis (in the 9-13 tonnes segment) at Fenatran 2009 in São Paolo, Brazil. This vehicle was developed at the Design Centre in Sete Lagoas, Brazil and produced using around 80% locally-manufactured components.
Turning to awards, the Daily CNG was named “Green Van of the Year 2009” by a prestigious UK trade journal and Iveco won the “Transport Innovation of the Year” award for Blue&Me Fleet, an advanced telematic fleet management system. The Daily was also named “Green Commercial of the Year 2009” at the Irish Fleet Transport Awards.
In November, the Italy-China Foundation and the newspaper Milano Finanza conferred the prestigious “Top Investor in China” award on Iveco, an award that recognises companies that have taken advantage of opportunities created through Italian-Chinese relations. In China, the new heavy segment Genlyon, the result of the partnership between Iveco and SAIC, was named “Truck of the Year” in the fleet class by China Auto News.
In December, Iveco was conferred the “Truck of the Year” award, for the third year running, by the prestigious Brazilian trade journal Autodata for its medium segment Tector. Autodata also awarded Iveco the “Business Management” prize for its expansion strategy for the Iveco brand in South America.
Iveco won the title of best importer in the transport sector in Germany.
Lastly, the Iveco Off-Road website won “Best in Class” in the automotive category at the Interactive Media Awards in New York, one of the most coveted awards given for demonstrating the highest standards of innovation in website design.
SERVICES
For 2009, performance in the Customer Services area was heavily influenced by a decline in after-sales activity, which had already shown signs of a slowdown in the latter part of 2008. During the year, spare parts inventories were scaled back by dealers to adjust to reduced business volumes, with no significant recovery in average mileage expected in the near term. The situation affected all markets, but was particularly extreme in Spain, the UK and Eastern Europe.
The availability of spare parts was impacted by difficulties in procurement as suppliers reduced production in response to the economic downturn. Iveco’s integrated virtual warehouse did however guarantee sufficient availability of critical spare parts.
Work continued on the implementation of RFID (Radio Frequency Identification) technology, which will improve logistics tracking and guarantee that customers receive spare parts made by Iveco.
In November, the VOR Parts programme became fully operational. This programme forms part of an integrated process to reduce downtime, providing a faster response when critical parts are required.
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Finally, the company established a three-year investment plan to increase the flexibility of its infrastructure and logistics processes, partly in view of the fact that the market is not expected to recover in the near term. Despite difficult economic conditions, 2009 provided confirmation of the value of investment by the service network in technical and diagnostic expertise. During the year, a new call management system for technical assistance and spare parts requests was implemented for the Western European network, making it possible to measure, in both quantitative and qualitative terms, the level of service provided by Help Desks. This forms the basis of the VOR Log system, which monitors vehicles being serviced across the network so that activities carried out at Iveco and the service centres can be optimised to minimise vehicle downtime. Launched in 2009, this system will be rolled out in all Western European markets by year-end 2010.
Iveco offers financial services in Europe and, through the financial services companies of Fiat Group Automobiles, in Latin America and China.
Since 2005, activity in Western Europe has been managed by Iveco Finance Holdings Limited (IFHL), a joint venture with Barclays Group in which Iveco holds a 49% stake (accounted for under the equity method). This joint venture supports the Sector’s European sales through dealer and retail financing in France, Germany, Italy, Switzerland and the United Kingdom.
In Spain, the activity is managed by Transolver Finance Est. Financiero de Credito S.A., a 50/50 joint venture with the Santander Group (accounted for under the equity method). The company offers both dealer and retail financing. Iveco also provides medium and long-term rental services in Spain through Transolver Service S.A., a wholly-owned subsidiary (consolidated on a line-by-line basis).
In Switzerland, Austria and Eastern Europe the activity is run by captive financial services companies (consolidated on a line-by-line basis).
During 2009, the economic downturn had a severe impact on the Sector’s sales volumes and, as a result, new financing volumes were also down in both Western and Eastern Europe.
For fully-consolidated subsidiaries only, the number of financed vehicles in 2009 was 2,776 (6,229 in 2008), with 1,118 new vehicles financed (3,260 in 2008) representing a penetration rate of 39% (39.2% in 2008). If the activities of Iveco Finance Holdings Ltd. are added, the number of vehicles financed through the Sector’s Financial Services activities decreased from 43,146 in 2008 to 22,637 in 2009. A total of 14,458 new vehicles were financed (30,738 in 2008), representing a penetration rate of 22.4% (28.2% in 2008).