REPORT

Iveco’s 33rd ‘State of the Nation’ .. outlines issues and challenges

Iveco’s 33rd ‘State of the nation’ briefing at the Cnh Industrial hQ in Basildon covered familiar issues and topics such as Brexit, Covid, Supply Chain and component shortages. All these factors have changed the business landscape, and with the outbreak of war in Ukraine, it looks like the anticipated economic recovery has taken yet another serious knock. As Lisa Fuller, Communications Director, Iveco UK & Ireland appropriately stated: “Change is natural, it’s organic, it’s gradual. But what’s been going on in our world recently is far from that ... Upheaval might be a more appropriate description!”

Despite all these disruptions, Iveco remained busy over the recent difficult two year period, with Mike Cutts, Light Business Line Director saying that over that time van demand boomed, although component supply delays did cause some lead time issues: “We think we were in a better position than most. Apart from a 2-week period when production slowed through a lack of components, we continued to build throughout the year.”

With Covid restrictions limiting business and movements in general during 2020, the following year saw the van market return to significant growth. Mike explained what was behind this development: “Delayed orders and a huge slice of natural recovery, unsurprisingly. Activity had plummeted between March and September 2020 while we were in lockdown mode. Uncertainty and a lack of confidence (particularly on CapEx expenditure) was the name of the game, with operators delaying their replacement plans and looking at ways of running their vehicles for longer. But all that did was build a head of steam, and as we left 2020 and entered 2021 - as the pandemic smoothed and restrictions began to be lifted - demand came back with a vengeance.”

“Life went on regardless for some businesses such as the utilities sector throughout the pandemic. Large-scale infrastructure projects, house building and the expansion of broadband remained on course, with governments maintaining commitments and looking to spend their way out of the crisis. This gave operators the confidence to start investing once again.”

“Home delivery of groceries and other essentials doubled during the pandemic – parcel deliveries boomed too - and that shift will remain. Sure, it’s likely to balance out slightly as things return to normal and people get back to retail outlets. But we’ve become used to that way of shopping - we’ve experienced its convenience, and we’re unlikely to move away from it again.”

“As a manufacturer focused more on the needs of professionals, our Daily product was well-suited to capitalise on the strongest growth areas - dot com, construction and the utilities. Indeed, some 70% of our 3.5 tonne volumes were

chassis-cab, bodied vehicles as opposed to simple white vans. Not only that, we took the strategic decision to re-enter the dot com channel in particular, with a 5-year strategy. As an example, we delivered 645 3.5 tonne Dailys to Tesco last year while other manufacturers struggled to supply.”

“We also re-engaged with the rental channel. Fact is, because of their robust truck design DNA, our Daily products have a longer first life than other competitor brands. That delays their return to the used market and distorts the RV in the guides due to an older age profile and their condition at auction. Regardless of what they are, rental vehicles have an average first life of 24 to 36 (occasionally 42) months – so when they come to market, because they’re younger, their RVs have a positive impact

Mike Cutts, Light Business Line Director

on the guide values, as long as you don’t over-supply the sector of course.”

“But the sector is poised for change - driven by the move towards electric drivelines in particular. A new generation of electrically-powered vans are on their way. In the main from start-up manufacturers, these will be bespoke in design - built to deliver right the way up to 7.5 tonnes - and could present a real change to traditional heavy vans in years to come.”

Mike introduced MY2022 Daily which he claimed: “takes innovation and connectivity to new heights with best-inclass comfort and safety, even greater levels of mission focus, and reductions in TCO. It has a new 6-speed manual gearbox. Precision gear engagement and the very best in gearshift feel and comfort will make it a favourite for drivers, especially in urban around-town applications. It adopts new state-ofthe-art engine technology, giving full compliance to ‘Light Duty Step D Final’ and ‘Heavy Duty Step E’ requirements ahead of new regulations. Daily’s 2.3 litre F1A now delivers up to 6% fuel savings over the previous model, while its new 6-speed manual gearbox enables a torque increase of up to 15%.”

At the heavier end, Iveco is strengthening its position as leader in alternative fuel. Rising diesel and energy costs are factors that make an impact on the demand for trucks these days, according to Gareth Lumsdaine, Truck Business Line Director. “For Heavy Rigids, from 18 tonners, 6x2s & 6x4s, 8x2s and 8x4s, no other sector covers as wide a range of applications as this one! Anything from urban and inter-urban distribution, to longer distance haulage, waste and recycling, demolition, construction and many more. Heavy rigids really are the workhorses,” he noted.

“From discussions with operators and bodybuilders, we believe much of the growth in the market was concentrated on eight wheelers - talk to almost any tipper bodybuilder now and they’ll tell you that order books stretch further into the future than at almost any time in the last two or three decades! But it’s not just eight wheelers - the waste and recycling sector is back and busy, and we continue to see a move towards 26 tonners for distribution away from 18 tonners.”

“And then there’s tractor-units, which have been the mainstay of top-weight road transport for several years now. Artics do everything, everywhere, at all hours of the day and night. They are the lifeblood that delivers the ‘just in time’ ethos of manufacturing, warehousing and retailing. And they still are. But tractors have had a tougher time than most since the start of the pandemic. That’s no real surprise because tractors are always the first indicator of a market decline. Why? It’s bigger fleets and rental fleets that buy the biggest numbers of tractors. And at the start of the pandemic, many simply stalled their fleet renewal policies and ran their assets for longer. They had plenty of them after all - many were even stood up - so why put new ones on the road when the existing ones are already being under-used?”

“But there’s more. From end of production line to registration and actually going into service, lead times for tractors are shorter than rigids. For tractors (under normal circumstances), lead times can be as short as a few weeks. For rigids - because of lengthening lead times on body slots and the time taken to body the truck - lead times can stretch into longer than several months. As a result, tractors going on the road today were actually made more recently than their rigid counterparts.”

Speaking about Iveco’s model line-up, Gareth is proud of the S-WAY, which he said “turns heads in a way that no other IVECO truck has for many years. It looks fresh, different, challenging, innovative. It’s attracting the kind of stares and attention normally reserved for the Swedish brands - and we’re delighted about that because S-WAY and its more recently launched X-WAY

stablemate deserve it. S-WAY is already the ideal vehicle for long-haul missions. And with a host of improvements and new features, we’re strengthening that even further by raising the bar on both performance and fuel efficiency, and delivering an overall reduction in fuel consumption of up to 3%. For starters, our new engine line-up meets Euro 6/E emissions standards and is type-approved for 100% second-generation bio-diesel, such as HVO. We’re introducing two new Cursor 13 engine variants - at 490hp and 530hp.” “Eurocargo continues to be the solid workhorse it’s always been and supported now by the 7.0 and 7.2 tonne Daily, we have the strongest lighter-end product range of any manufacturer. “ And it’s not all about diesel either! “As a brand, we’ve championed the drive towards alternative fuels - and Gas in particular - for several years now as you know. Gas is the gateway to lower emissions and longer term decarbonisation [to meet] the challenges of a new, greener world that all of us are driving towards. By 2035, newly-registered trucks up to 26 tonnes have to be emissions-free. By 2040, all trucks going on the road have to be emissions-free. That places huge demands on us as manufacturers, and on our industry as a whole,” Jorge Assensio, Medium/Heavy Product Manager & Alternative Fuels Business Director commented further on this topic: “Our greatest challenge is to deliver a new, greener, cleaner world. One in which we can live our lives without harming either our planet or ourselves. That, of course, has huge implications for us in road transport. For over 100 years, we’ve relied on fossil fuels. And since the 1930s, we’ve relied on a single fuel source - diesel - to do what we do. And it’s done a superb job. It’s incredibly efficient. It suits every type of transport application. It’s readily available. And it’s exceptionally Gareth Lumsdaine, Truck Business Line Director cost-efficient. But fossil fuels like diesel aren’t good for our environment. It’s an inescapable fact. And despite our success in reducing the harmful emissions these fuels produce, we cannot get away from the reality that - even under the exacting provisions of today’s Euro 6 - burning one litre of diesel produces 2.63 kgs of CO2. It was the case in 1930. And it remains the case in 2022. It’s a chemical fact.”

“If we are to deliver the new, greener, cleaner world we all want, then that has to change. We have to achieve net zero emissions as soon as we possibly can. We have to decarbonise.

In developing carbon-free, zero emissions vans and trucks, we have to remember that those who use them every day are practical people. They use them to do a job - they use them to make money. As well as being emissions-free, those vans and trucks must have the range to do the job, the load capacity to do the job, the reliability and dependability to do the job. And most importantly, they must be cost-efficient - in terms of acquisition cost, running cost, maintenance cost and whole life cost. No-one has an 100% emissions-free heavier van or truck that can deliver all those priorities today. Trucks come in different sizes, weights and configurations, after all. They do different things. In different environments. On different surfaces. Over different mileages. No single emissions-free solution is going to meet the demands of such a vast array of requirements in the short to medium term - certainly not by the government’s 2035 and 2040 deadlines for trucks. And it’s one thing having a ‘zero tailpipe emissions’ vehicle available. The perhaps even bigger challenge is having an infrastructure to support it. To refuel it. To support it. To finance it. And to minimise the inevitable high costs of being an early emissions-free adopter.” “The reality is that practical, reliable and versatile 100% emissions-free transport - an equivalent of the almost ‘worry-free’ transport we enjoy today with diesel - is still some way away. There are some, of course, who have the resources and determination to be an early adopter today. And options are already coming to market for them to do so. But they need to have set routes, limited range requirements, flexible payload weight requirements - and very deep pockets! For the majority, the goal of being carbon neutral remains a medium to longer term consideration, not something they can realistically take on board today.”

“At Iveco, we’ve always been aware of that. Which is why we’ve been focused on developing low emission alternatives for many years now. Absolutely, 100% emissions-free is the goal. But while we as an industry are working on that - us as manufacturers, and those who will deliver the all important infrastructure network needed to make alternatives to fossil fuels work - while this is happening, already we have a compelling low emissions alternative to diesel on the market. Already proven. Already available. And already being used by an increasing number of operators in the UK and across Europe and that is Gas or Biomethane, which is a gateway - a first step - to zero emissions transport. Using bio-gas reduces tailpipe emissions by as much as 95% - fact.”

“In terms of operation, there is almost no difference in operating biomethane-powered trucks to diesel. They’re easy to use, easy to refuel and easy to live with - and significantly, they are a superb first-step to getting drivers on-side in moving to a zero carbon future. Their re-fuelling network is up, running and expanding fast - so for most, range is not an issue. And there is very little difference in weight, so payloads remain as adaptable as they are with diesel. Cost-wise, the economics Jorge Assensio, Medium-Heavy Product Manager work too. Yes, they are more expensive & Alternative Fuels Business Director to acquire - but for most, a 2/3-year payback is very much the norm. And against the up-front capital cost of today’s initial emissions-free offerings, there is no comparison. Biomethane offers a practical, workable low-emissions alternative to diesel now, today - and tomorrow. Iveco will continue to develop it as a mainstream alternative to diesel as the marathon towards 2035 and 2040 continues.: “Sure, biomethane is an interim solution. We expect its popularity to peak around 2030 when emissions-free solutions become a real world, practical alternative. But it is Part 1 of our strategy for eliminating emissions. Part 2 will be battery electric. And Part 3 will be hydrogen fuel cell. That is what we are working on now, in partnership with those who will supply the all-important support infrastructure that’s going to be needed to make it work. Until then, Biomethane is our focus and what we will be pursuing. Because operators are practical people in business to make money. And gas is the best option to enable them to do that - and make a serious commitment to looking after our people and planet - now, today and tomorrow,” concluded Jorge. Text: Jarlath Sweeney - editor@fleet.ie