As we walked towards Franco Fenoglio's office at the beginning of February, along the corridor of power at Iveco's headquarters in Turin, everything appeared to be business as usual.

We passed the soon-to-depart CEO Jose Maria Alapont - looking unusually tired - briefing one of his staff. Generally, the people working in Iveco's nerve centre looked relaxed and there was even a feeling of calm.

There has been much speculation in the Italian and UK press about what the future has in store for Iveco as its parent company, Fiat Spa, struggles through ever-deepening financial waters. Coincidentally, the man who came to shake things up at Iveco 17 months ago has opted to walk away from the heavy truck and engine builder 'to pursue new challenges' with US automotive components manufacturer Federal Mogul.

As far as Iveco's number two, Franco Fenoglio, is concerned it is business as usual. Iveco was one of the only two Fiat-owned companies to have made an operating profit in 2003. In view of its relative successes and rumours in the Italian financial press could Iveco be on the market to raise funds to help Fiat?

Pure speculation

'The article you refer to in Milano Finanza is pure speculation,' says Fenoglio. 'I can assure you that Iveco is not for sale. It is an expanding multi-national business with a range of excellent products. We are focusing for the future and investing in newtechnologies, like €1bn on engine development.'

Despite making an operating profit in 2003, the result was a net loss for the Italian manufacturer. Will Iveco improve its annual trading figures from those posted in 2003? 'There are still three months to go before our 2004 results can be made public and if I were to tell you the figures I would probably be looking for another job,' Fenoglio laughs. 'Our overall sales were up last year and we expect our growth and performance to be better than average and to follow the increasing market trends,' he replies.

Iveco has refocused its response to the market. Fenoglio acknowledges that the UK is a unique market for Iveco: 'In Italy the customer mainly has small fleets but in the UK there are big logistics companies so we need specialised key account managers dedicated to the fleet. This is with a common back office, common services, but in front of the customer we are really, really focused on their needs. If you want success in the UK heavy truck sector it is important to have the right product, but also the right organisation behind it to serve the needs of the customers' Fenoglio emphasises.

Sales of Stralis in the UK have been disappointing with only 3% of the tractor market last year: 'Stralis is a really good product, but the image of Iveco has not been very good. Every day in Europe now when a customer tries the Stralis our image improves. The problem in the UK is image. It is a terrible thing when people have long memories, but now in the UK we have a great team and its leader, Chris Thorneycroft-Smith, is very talented. Giuseppe Franchi is a very important general manager for us, and looks after all our business in the UK, but for trucks the strategy of Iveco is to have an Englishman in charge who knows his customers, their culture and the market,' he says.

Dedicated team

'We are very proud of Iveco in the UK and it has a very motivated and dedicated team. Every Monday we have a conference call with the UK and more and more we get reports of customers testing our heavy trucks. This is what we want to achieve so they can see how the product improves. If we can do this, in two years we will increase our heavy truck market share. In January we had 7.3% of UK market share so it looks more positive. We aim for a minimum of 10% market share,' Fenoglio adds. As part of its drive to improve sales, Iveco is investing in its UK dealer network, the latest being a £3 million investment in Bristol Street Motors:

'It is important that we increase the quality and coverage of our dealer network in the UK. In the past dealers have been cautious about investing in Iveco, but now I think the reverse is true. Now we are ready to help dealers to invest in Iveco in the UK,' he says.

Some truck manufacturers are talking about order lead times in excess of 15 weeks due to demand and raw materials supply and they say it will get worse. With the introduction of Euro 4 next year does Iveco see the need to order early for its products? 'Our lead times are not more than 15 weeks,' Fenoglio says. 'It is around 10 weeks maximum. Yes, of course there are problems with steel and tyres, but I can see no increase at the moment. 'Our Euro 4-engined trucks will be ready to order by May/June this year. We do not anticipate any lead time problems and we do not envisage any transition problems.

'There are few incentives for the early introduction Euro 4. Our trucks will cost around €5,000 more at Euro 4 and it is the same for competitors. The supply of urea is not in place and so I think people will order Euro 4 when they have to and not before,' he says.

Iveco says that Seddon Atkinson will be more closely integrated into the parent company. Will the brand survive? 'We don't want to loose this brand,' says Fenoglio. 'We have integrated the production of Seddon into our range because it is not possible to sustain a separate production and we are doing the same with the management.

New cabs

'I am sure we will maintain the brand because it is a good name and brand for the UK municipal market. We have a new cab for the range, which will make it better, and this is being introduced.

In line with Seddon market positioning in the municipal sector, it is likely that a lightweight product similar to the Iveco Trakker will be available in the future. Iveco has told us that outside the UK any lightweight multi-axle vehicle produced in the future is unlikely to be badged Seddon.

Iveco's worldwide investment includes India, Korea and South America. But will this benefit the UK customers? Fenoglio explains: 'The company's long-term future will be as a result of growth in these areas. It takes huge investment to grow market share in Europe. In the developing countries we can be more profitable and grow quickly. This has a direct benefit to Europe because it means we will have more to invest in technology, services and what we can deliver to our customers here.'

Eastern promise

But will all this investment in emerging markets eventually come back and bite European manufacturers? 'This is a very good question. You mean like cars? Yes, I agree, it will happen and a Chinese or Korean company will come and buy a European company, but today if a Chinese company comes and wants to buy Iveco the answer is no,' Fenoglio laughs.

Alapont, who will be succeeded by Paolo Monferino – now head of Fiat's tractor unit CNH – appears to have done an OK job at Iveco, although not in a universally popular way. Whether his move is a result of him feeling 'restricted' working under the shadow of Fiat or he can see into the future and does not like what he sees, only he can say.

But what we do know is that Iveco seems to be moving in the right direction and our overall impression from our interview with Iveco's senior vice-president sales and marketing, Franco Fenoglio, was that we were talking to an up-beat man, confident about his product and his company's future. And, more importantly, he is confident that his new boss, Paolo Monferino, will continue the good work.