Tata Motors' Iveco takeover to fuel global CV ambitions but not without risks

Economic Times

30-07-2025

MUMBAI: Tata Motors has agreed to acquire Italian commercial vehicle maker Iveco in what would become its largest-ever acquisition, surpassing the 2008 Jaguar Land Rover (JLR) deal. The acquisition of Iveco, Europe's fourth-largest truck and bus maker maker, is widely seen as a strategic move by Tata Motors to elevate its commercial vehicle (CV) business from a mainly domestic focus into a significant global force.Tata Motors offer is aimed at acquiring 100% of Iveco's common shares with a subsequent delisting of Iveco Group from the Euronext Milan stock exchange. The all-cash offer valued Iveco at about Rs 3.8 billion ($4.4 billion). Both companies believe that having Iveco operate as a wholly-owned unit of the Mumbai-based automaker is crucial for its sustainable success and long-term value creation. Iveco has a diversified business with 74% of revenues from Europe and the rest from South America, Africa, and Oceania.
"This combination is a strategic leap forward in our ambition to build a future-ready commercial vehicle ecosystem," said Girish Wagh, executive director of Tata Motors. "By integrating the strengths of both organisations, we are unlocking new avenues for operational excellence, product innovation and customer-centric solutions."He said the combination of Tata Motors and Iveco would allow them to cater to diverse mobility needs across markets, delivering sustainable transport solutions.Through the deal, Mumbai-based Tata Motors would gain access to advanced electric vehicle and hydrogen powertrain technologies, a broader product lineup, and immediate entry into several new markets. With minimal overlap in product lines and geographies, the merged entity would have annual sales of over 540,000 vehicles and combined revenues of around Rs 22 billion (Rs 2.2 lakh crore). Operations would span Europe (50%), India (35%), and the Americas (15%), with a growing presence in Asia and Africa, the companies said in a joint statement.
The partnership is expected to enhance innovation in sustainable mobility, improve operating leverage, and unlock efficiencies by sharing capital investments across a larger volume base. It will also enhance Iveco's powertrain arm, FPT, expanding its global reach and capabilities, it said. The deal excludes Iveco's defence business, which is being spun off and sold to Italy's Leonardo in a separate transaction."This acquisition will help Tata Motors become a global player-an ambition it has harboured since it acquired Korean commercial vehicle maker Daewoo Motor in 2004, but which remained largely unfulfilled," said VG Ramakrishnan, managing partner at Aventeum Advisors, a transaction advisory firm.On the domestic front, Tata Motors' share in the CV market has been declining amid rising competition and product gaps in key segments. It fell to 37.1% in FY25 from 41.7% in FY23, according to data from the road transport ministry's Vahan portal. Earnings, however, improved thanks to better realisation and cost control despite pressure on volumes. The acquisition of Iveco could thus plug one of Tata Motors' most critical weaknesses."It will also help Tata Motors strengthen its position in the significant intermediate commercial vehicle (ICV) segment, where rival Eicher has a strong presence and Tata has struggled," said Mahantesh Sabarad, an auto industry expert. "But the timing of this deal is delicate, given the CV business is being separated and prepped for re-listing sans passenger vehicles. An acquisition of this size could be a bit of a stretch for the company," said Sabarad, referring to Tata Motors' plan to split its passenger and CV businesses into separate listed entities. Iveco's technology is not new to Indian roads.
In 1987, the Italian company became a shareholder and technology partner in Ashok Leyland, helping launch a new generation of trucks powered by Iveco engines and platforms. Though the Hinduja Group bought out Iveco's stake in 2007, its engineering legacy continues to influence Ashok Leyland's product design. Market reaction to the news has been mixed. Tata Motors shares closed nearly 3.5% lower on Wednesday after reports emerged of the potential acquisition.