The worldwide marketing strategies of Fiat Powertrain Technologies

Diesel Progress North American Edition, March, 2008 by Natale Antonio Rigano

From the very beginning, the strategy of Fiat Powertrain Technologies has been to unify the innovation capabilities and technological expertise before spread among Fiat Auto, Iveco, Centro Ricerche Fiat and Elasis. Through that strategy, FPT is capitalizing on the technological excellence of Fiat engines and transmissions to approach the open market, gaining and increasing shares through noncaptive customers.

Of course, the base business and the starting point is "captive," as Iveco, Case New Holland (CNH) and Fiat Auto are presently the major customers, however, this captive knowledge can help us to successfully approach and manage new customers.

The open market business is implemented on two parallel channels. One is retail, based mainly on sales through the company's network of distributors and dealers. Established by Iveco-Aifo and Iveco Motors, this retail channel is able to sell tailored engines to small OEMs. The second path to market is through the KA channels, structured to serve global OEMs directly with an internal sales force, operating in the automotive, industrial and power generation market segments.

FPT's strategy of doubling its volumes by 2010 has been approached by Sales & Marketing by focusing its effort on the open market, prioritizing areas that will give the company a global presence where it will structure the FPT presence by replicating the central structure.

On the KA side, one of the first large contracts of strategic value for the new organization has been the Daimler/FPT agreement for the supply of 78,000 engines per year for the Canter light commercial vehicle of Mitsubishi Fuso. This deal has been followed synergistically by Sales & Marketing, application engineering and manufacturing demonstrating how FPT can work as one company, thereby giving its global players multifunctional support to cover all their different needs.

As mentioned, the FPT approach is not restricted to a limited number of large customers, but with its network tries to gather a portfolio of medium-sized OEMs evenly distributed in the various areas of the world.

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In Europe, the Fiat Group is traditionally present and our strategy now is to consolidate and extend the former Iveco Motors network, growing the penetration especially in the Eastern European countries. A special effort is also made in the Mediterranean coastal area where the current network of local shops will be improved to provide an even better assistance to FPT marinized engines that are powering both pleasure hulls an professional fishing boats.

North America is another marketplace of strategic interest, given both its size and the number and importance of its OEMs. FPT North America has already established a network of local dealers and a decentralized R&D and Engineering Center is going to open in Burr Ridge, near Chicago, to assist local OEMs. CNH, one of the largest OEMs belonging to the Fiat Group, is considered the starting point to develop this approach.

In Latin America the situation is different, as the Fiat Group also has a large footprint in Betim, near Belo Horizonte that enables the group to be a market leader in the automotive sector. FPT is benefitting from this industrial footprint to produce industrial diesel engines of the Nef and of Cursor families, while gearboxes and axles are produced in Cordoba. The main challenge in these countries, protected by high import duties, is to produce engines with high local content in order to satisfy OEM needs through local production.

China, India and the Far East are the fastest developing countries in the world and FPT decided to be present there through a joint venture with Tata, the market leader in the Indian manufacturer for India. That led FPT to produce industrial engines in Pune for both Tata and also to serve Indian OEMs producing agricultural and construction machinery, as well as generating sets.

A similar deal was concluded in November 2006, with Iveco, SAIC and Chongching for the construction of an engine manufacturing plant in the Chongching industrial area. This plant is sized for the production of 100000 engines per year to be distributed through three different channels. These include the two Fiat Group companies already well established in China, Iveco and CNH; a growing group of Chinese OEMs of off-highway machines that are distributed in the domestic Chinese markets; and for export to the rest of the Far East and Australia, which are served through the Shanghai hub.

Finally in Russia, a similar deal is in the advanced planning stage with a local player. The engine production pole will serve the growing group of Russian OEMs mainly dedicated to develop mobile equipment for the internal Russian marketplace. At the time of writing, the joint venture is not signed, but the agreement should be concluded within the first half of 2008.

By Natale Antonio Rigano, Vice President Sales & Marketing