Tata Motors To Buy Italian Truck Maker Iveco: What it Means for Co's Int’l Business & Demerger Plan

Tata Motors is holding advanced-level talks with the Agnelli family to acquire Italian truck manufacturer Iveco. The deal worth $4.5 billion is currently being discussed between the boards of Tata Motors and Turin-based Iveco, the Economic Times reported. The companies haven’t made any official announcement regarding the deal yet. The Italian truck maker's footprint in more than 160 countries will provide Tata Motors with a significant opportunity to enhance its focus on the global market. 

“Discussions have been ongoing for the last one and a half months and have intensified in recent weeks,” ET reported, citing a source. “Both sides entered into an exclusivity agreement for bilateral negotiations. The exclusivity is due to lapse on August 1,” the source added. 

Italy-based Iveco is an acronym for Industrial Vehicles Corporation and was founded in 1975, a result of a merger of five truck brands within the Fiat Group, including Fiat, OM and Lancia of Italy, Unic of France and Magrius Deutz of Germany, according to the group’s website. It is one of the biggest names on the world’s large commercial vehicle manufacturers list.

What is the deal? 

Under the merger and acquisition agreement being discussed between the parties, Tata Motors is likely to buy 27.1% from Exor. It is the investment company of the Agnelli family and commands over 43.1% of the voting rights of the truck maker. The remaining stakes will reportedly be acquired by the salt-to-steel conglomerate by launching a tender offer. The tender offer is similar to India’s open offer, where shareholders are invited to sell their shares for a specified price and within a particular timeframe. 

The unconfirmed deal worth $4.5 billion will not just be the biggest acquisition move for Tata Motors but will also be the Tata Group’s second-largest acquisition since it acquired Corus in 2007. 

The Italy-based Iveco group is demerging its defence venture as well, but the deal that is being discussed with the Tata Group board is only for buying a 100% stake in the listed Iveco. 

The deal will also be a significant one in strengthening Tata’s ties with the Agnelli family. In 2006, there was a joint venture between the Tata Group and Agnelli-owned Fiat Motors in India to produce cars, engines and transmissions in Maharashtra’s Ranjangaon. 

What does the European Commercial Vehicle Market Look Like? 

The Tata-Agnelli family deal comes around a time when the European commercial vehicle market is experiencing a decline in growth. According to the European Automobile Manufacturers’ Association (ACEA), new European van and truck registrations decreased by 13.2% and 15.4%, respectively, in the first half of the financial year 2025. Germany, France and Italy contributed majorly to the decline. 

“The first half of 2025 proved challenging for the EU’s commercial vehicle market, marked by significant registration declines in key market, amidst an already challenging economic context,” ACEA stated. 

After FY23, when the European commercial vehicle registration volume reached its second-highest level, the market has been experiencing a decline in growth. While FY24 was a tough year for the market, FY25 will be tougher, according to S&P Global Mobility’s new MHCV Industry Forecast Report for Q1 2025. The report stated that factors like sluggish economic growth, decreasing order intake, and political instability have resulted in uncertainty for businesses. 

Tata Motors Proposed Demerger & International Market Bet 

The development is significant as it comes around a time when the Tata Motors board approved the demerge of its passenger and commercial vehicle business into two separate entities to drive more strategic growth. The demerger will be implemented via the national company law tribunal’s scheme of arrangement, the company said in a statement on March 4. 

Tata Motors both passenger and commercial vehicle segments witnessed a decline in sales in Q1 FY26, with 15% and 5%, respectively. While its total domestic PV sales declined by 15%, CV decreased by 9%. But the company’s sales performance in the international business (IB), both in the passenger and commercial vehicle segments, remained strong. While its PV sales from IB grew by 54%, its CV sales increased 70% in Q1 FY26. Its strong performance in the international market compared to the domestic could be a factor why the company is pinning its hope on the global market.