Iveco bounces back!
Iveco bounces back!
Iveco is preparing to make major strides in South Africa. CHARLEEN CLARKE flew to Madrid, Spain, to visit the company’s truck plant and conduct an exclusive interview with Shahram Falati, business director – Africa & Middle East at Iveco. He reveals that a number of significant developments are on the cards, including the resumption of local completely knocked down (CKD) assembly.
Follow the money. That’s what one has to do to measure any company’s commitment to a market. In the case of Iveco, its commitment to South Africa is unmistakable: the company is on the brink of resuming CKD assembly in the country. “We are in discussions with a local partner and hope to begin assembly by the beginning of 2026,” confirms Falati. “We will start with the S-Way, followed by the T-Way. This step will help us regain price competitiveness in a very tough market.”
Iveco previously attempted local assembly a decade ago, but the effort proved too ambitious. “It was too far-fetched and the plant was too big. We also tried to bring in products from China, which wasn’t successful. We have learned our lessons. This time, we are focusing on a more sustainable plant, tailored to high-volume models used in commodity transport, the truck tractor sector, mining, and quarrying,” Falati elaborates. The move is especially important given the high customs duties imposed on imported, fully built units (FBUs). “Most of our European competitors have local assembly plants. Because we import complete vehicles, the customs duty is extremely high, which erases our competitiveness on price,” he says.
The move is especially important given the high customs duties imposed on imported, fully built units (FBUs). “All our European competitors – apart from DAF – have local assembly plants. Because we import complete vehicles, the customs duty is extremely high, which erases our competitiveness on price,” he says.
Understanding the market
Falati is candid about Iveco’s current performance in South Africa. “To be honest, for sure our sales in South Africa have ample room to improve,” he acknowledges. “In 2024, the company reported strong global results across several segments, which was not as evident in South Africa.” He attributes this to a variety of challenges, including the unique structure of the South African market. “It’s a complex and extremely competitive environment – unlike any other country in Africa. The number of competitors is staggering. The financing models are very similar to Europe, with many customers opting for buyback schemes,” he explains.
Macroeconomic conditions have also taken their toll. “The coal price has declined, and South Africa is a net coal exporter. One of our biggest clients is a coal transporter who usually buys many vehicles from us every single year. Over the last 18 months, he hasn’t bought anything,” says Falati. Despite these obstacles, he remains positive. “When the commodity market improves, that will help us. But we’ve learnt a lesson: we need to diversify into distribution logistics to avoid such heavy dependence on one segment.”
Strength in MCVs
Although challenges persist in the heavy-duty segment, Iveco has found firm footing in the medium commercial vehicle (MCV) market. “In South Africa, we are actually stronger in MCVs. We typically sell about 750 to 800 Dailys every year,” says Falati, noting that the company has an extremely strong footing in the ambulance segment: “We are the leader in the ambulance market – by far. Every year, we sell around 300 ambulances.”
However, recent political developments have presented hurdles. “This year, we have struggled because of the delay in finalising the National Budget. Our ambulances are ready. Once the orders are placed, we can deliver immediately. But, thanks to the delay in the budget, we have yet to receive those orders,” he says.
A realistic dealer strategy
The dealer network will no doubt pop the champagne when those orders come. Meanwhile, they won’t only be focusing on the Iveco brand, because Iveco’s dealer strategy – while sometimes controversial – is rooted in realism. Many of its dealers also represent FAW, a Chinese truck brand. “Was it the right decision to allow our dealers to sell FAW as well? To be honest with you, I believe yes,” says Falati.
“With the volumes we’re selling, it’s not economically viable for the dealers to have one brand only. We want strong dealers. We want them to make money. We want their workshops to be full, and those vehicles don’t necessarily have to be Iveco vehicles.”
Yet, he underscores the need for clarity. “The dealers obviously need to have a clear strategy and divide premium from the cheaper brand. Some of our dealers are doing this quite well. They are making good money, and we’re happy for that.”
Falati points out the challenges of competing with brands backed by the Chinese government: “Sometimes it is hard for us to compete with FAW. They have government backing and can reduce prices significantly. The Chinese government also supports them in financing risky clients. In Europe, we don’t have this luxury. European governments are not allowed to assist private companies in that way.”
He draws a comparison with another former disruptor. “I would like to remind you what happened with the Koreans. When they first launched their vehicles, they were exceptionally cheap. Now try to buy a Kia! They have spent money on quality, and they give a seven-year warranty, but the price is no longer cheaper than a European or Japanese product. That’s because quality has a cost. Exactly the same will happen eventually with the Chinese. As their quality improves, they will lose their price advantage.”
Where Iveco wins: Aftersales and longevity
In the face of price wars, Iveco is playing to its strengths. “At the moment, we can’t tackle the Chinese on price or financing. But we can beat them on aftersales service and spare parts availability,” Falati asserts. “The other factor is vehicle longevity. Our vehicles are more durable and robust and hold their value better in the used market.”
To reinforce this message, Iveco is planning a customer initiative. “We are going to launch a campaign, inviting anyone with an Iveco that has done more than a million kilometres to come forward. We want to promote this,”
he says.
“Recently, I was in Dubai, and I saw two Iveco vehicles that had done over a million kilometres without any major overhaul. This is something we can promote,” he reiterates.
Furthermore, Falati believes that high-mileage Iveco vehicles are a dime a dozen: “The average age of an Iveco in Africa is 20 to 25 years. What Chinese vehicle can make this claim?”
Future-ready: A focus on innovation
Iveco’s long-term roadmap is built on innovation. “In Europe we are already commercialising many of these products, such as natural gas technology and electric vehicles. We are now in the phase of testing these vehicles in African conditions,” says Falati, adding that the strategy includes harmonising platforms for different markets: “We offer vehicles in Euro 3 and Euro 5 emission levels in South Africa that can support most of the advanced driver assistance systems (ADAS) that are available in Europe.” Several launches are now on the horizon. “We will soon launch the MY24 variant of the Eurocargo in South Africa. This will be completely on par with the offerings in Europe, except for engine emissions,” he reveals.
Recent product milestones include the CNG light range, the A8 automatic gearbox across the Daily range, and the new Daily 7.0-t 4×4 Panel Van. “In 2024, our South African team completed extensive testing of the S-Way Euro 5,” says Falati. “We are now developing project plans for its market introduction in 2025/2026.” He notes that the T-Way is also being enhanced: “We are upgrading the engines to the 470-hp variant on both 6×4 and 8×4 models.”
The emissions issue
South Africa’s emissions regulations remain a sticking point. “This sets the bar for entry into the market very low,” says Falati. “Consequently, much of the pricing pressure is the result of old and new technology competing in the same market. While Euro 2 standards are now widely considered obsolete, we see global demand for Euro 3 engines declining. That will make manufacturing them economically unsustainable.”
The South African government’s Clean Fuels Bill, originally scheduled for 1 January 2023, has been postponed to 1 July 2027 – but the company is pressing on with its product strategy regardless. “At Iveco, we have Euro 5 technology available today on all our line-ups. We’re not waiting for government policy,” explains Falati. “In South Africa, we’ve already introduced Euro 5 in our MCV range and are doing road tests for our heavy range with the aim of introducing next year.”
What about buses?
As is commonly known, Iveco withdrew from the bus market in South Africa a couple of years ago. When asked about the possibility of returning to the bus business here, Falati is pragmatic. “We pulled out of the bus segment because we didn’t have a rear-engine chassis compatible with Euro 3 or 5. There is a plan to develop a suitable product, but we do not yet know when that will be.”
No uncertainty in future plans
While there is some uncertainty about Iveco SA’s participation in the bus market, Falati is adamant that the future looks good for the company. “Our product range is good, and we have all our vehicles in right-hand drive. We have a good sales force, a strong dealer network, and a spare parts warehouse dedicated to SA. The basis for success is there,” he notes.
Then, of course, there is the return of CKD assembly, which will provide employment and lower prices for customers. It will also lead to increasing levels of local adaptation to meet SA customers’ needs. Add to that the company’s renewed product strategy and focus on long-term value over short-term price battles, and the future looks rather good. “We know we can’t beat the Chinese on price,” Falati reiterates. “But we can beat them on quality, service, and long-term value. That’s where we will focus.”
With its plans to promote its million-kilometre trucks, Iveco is clearly gearing up to show that durability – not discounts – is what counts in Africa.
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