Iveco buy may fuel global expansion, exports for Tata Motors' CV unit

Business Standard

3 days ago

If the much talked about $4.5 billion deal between Tata Motors and Italian truck-maker Iveco goes through, it could transform Tata's commercial vehicle (CV) business from a predominantly domestic operation into a global player, opening doors to mature markets in Europe and Latin America while positioning exports as a key growth driver.
For Tata Motors, whose CV division currently derives nearly 90 per cent of its Rs 75,000 crore revenue from India, the acquisition represents a strategic leap into new geographies. Iveco has an established presence across Europe, Latin America and Asia-Pacific—with production facilities in Europe, China, Russia, Australia and Latin America, and a network spanning 160 countries.
Tata Motors did not respond to queries sent by Business Standard till the time of press.
Markets have not reacted positively to the news, as Tata Motors' stock fell 3.4 per cent, ending the day's trade at Rs 668.40 apiece. Investors are concerned that a deal of this size may pressure the balance sheet, given that Tata Motors has already announced plans to invest £3.8 billion in Jaguar Land Rover (JLR) for FY26. However, the company is splitting its passenger vehicle (PV) and commercial vehicle businesses this year, which will operate as distinct arms.
On the positive side, industry experts say Iveco's strong distribution network, market leadership in Europe's intercity and city bus segments, and established presence in natural gas-powered long-haul trucks provide Tata Motors with a ready platform to penetrate mature markets where it currently lacks presence. 'Exports, which are currently negligible, could become a significant growth driver for Tata Motors' CV business post-acquisition,' said an industry executive.
The deal, expected to be formally announced shortly, will also complement Tata's product portfolio with Iveco's strengths in natural gas-powered trucks, intercity buses and sustainable powertrains, including electric and hydrogen technologies. Industry observers note that this aligns with Tata's ongoing trials of hydrogen trucks and electric vehicles in India and its ambition to leverage alternative fuels to future-proof its CV business.
'Access to Iveco's markets will be a game-changer for Tata Motors, especially in Europe where Iveco holds strong brand equity,' said an auto analyst.
However, analysts caution that synergy benefits may be limited. 'Iveco's technologies are additive only to a limited extent, with considerable duplication in model line-ups and production capacities,' said an auto sector analyst. European acquisitions also come with legacy baggage—retirement benefits and high-cost structures that often weigh on profitability.
Iveco's annual revenue of €10 billion is expected to boost Tata Motors' CV scale, with its portfolio of electric buses, electric light commercial vehicles (e-LCVs) and alternative-fuel technologies. Experts believe that, if successfully executed, the acquisition could nearly triple Tata Motors' commercial vehicle revenues from the current Rs 75,000 crore to over Rs 2 trillion.
Currently, Tata Motors' CV exports remain modest. In FY25, exports rose 2 per cent year-on-year, increasing from 17,677 units in FY24 to 18,164 units, according to Society of Indian Automobile Manufacturers (SIAM) data. In Q1FY26, CV exports surged 68 per cent to 5,969 units, compared with 3,540 units in the same quarter last year.
Tata Motors' CV revenue has seen fluctuations over the past four years, rising from Rs 52,287 crore in FY22 to Rs 78,791 crore in FY24, before easing to Rs 75,055 crore in FY25, according to Capitaline data. During this period, the CV segment's share in the company's total revenue declined from 18.8 per cent in FY22 to 17.3 per cent in FY25, even as overall revenue rose from Rs 2,78,139 crore to Rs 4,33,676 crore.
Credit rating agency ICRA projects India's CV industry to grow 3–5 per cent in FY26 after a flat FY25, with exports and green technology expected to play a pivotal role in long-term expansion. Iveco's EV and hydrogen expertise, combined with its access to Europe's emissions-driven market, could accelerate Tata's alternative-fuel roadmap domestically.
According to Bloomberg data, Tata Motors' key acquisitions and investments include the $2.3 billion cash acquisition of JLR from Ford in March 2008, followed by a $500 million investment in Lyft in April 2017. Earlier deals include the $118 million purchase of Tata Daewoo Commercial Vehicle in November 2003.
Analysts also note that Tata's cautious approach to restructuring acquired companies may delay synergy benefits, even as Iveco's share price has risen on deal expectations, while Tata Motors' stock has declined.