Automaker Fiat sent its truck and farm equipment group down a different road when it established Fiat Industrial in January 2011. Fiat Industrial consists of agricultural and construction equipment manufacturer CNH Global, truck and commercial vehicle manufacturer Iveco, and engine manufacturer FPT Industrial (formerly Fiat Powertrain Technologies). CNH Global, which makes heavy machinery under the Case, Kobelco, New Holland, and Steyr brands, is the group's largest segment. Iveco makes commercial trucks, construction vehicles, buses, and fire trucks under the Astra, Irisbus, and Magirus brands. In order to simplify its shareholding structure, in 2012 Fiat Industrial agreed to merge with CNH Global.
Change of Company Type
Under the terms of the proposal announced in 2012, Fiat Industries and CNH Global are combining into a new holding company (likely dropping the Fiat name) domiciled in the Netherlands. The company hopes the new combination will be more attractive to international investors and provide a more ample avenue for growth opportunities. The merger is projected to close in mid-2013. Fiat Industrial owns 88% of CNH, which is based in Chicago. The name of the new company will be changed to CNH Industrial N.V.
Some 90% of the engines used in CNH equipment and Iveco vehicles are made by the group's third segment, FPT Industrial. FPT Industrial cranks out more than 2.5 million engines and 2.4 million transmissions and axles from its 10 manufacturing plants across Europe and in Argentina, Brazil, China, and India. It makes gas engines for small, medium, and heavy trucks; diesel engines up to 870 hp; hybrid engines for light commercial vehicles; boat engines; and power generators to run electricity in emergency and offshore applications. FPT Industrial generated about 5% of it revenues in North America in 2009; Fiat Industrial is more focused on expanding its brands in the BRIC (Brazil, Russia, India, and China) countries.
While Fiat looks to sell cars in the US, Fiat Industrial plans to sell trucks and heavy machinery around the world. Currently it makes about 40% of its overall sales in Europe, with North America as its second-largest market, comprising about a quarter of sales. CNH, which accounted for more than half of the group's sales in 2009, is a leader in agricultural and farm equipment in Europe, North America, and Brazil. The company also is expanding through joint ventures in India (with Larsen & Toubro), Japan (with Sumitomo), and Russia (with OJSC KAMAZ). It targets a region's agricultural equipment needs by its top crops (for example, selling sugarcane harvesters in Brazil). Altogether, CNH has 24 manufacturing plants on four continents.
The company is focused on expanding in Latin America, where it has operations in Argentina, Brazil, and Venezuela. Iveco has 24 manufacturing plants in Europe, Latin America, and Australia, and another dozen as joint ventures in China and Russia. Its trucks and buses are sold through a network of more than 700 distributors.