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The World’s Truck Manufacturers

A strategic review offinance and operations

9th Edition (2006)

An AWResearcher pub ation published by Synesis Media14 Gr

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THE AUTHOR

Jonathan Storey has worked in the motor industry for more than 15 years. Beginning as a financial analyst for FordMotor Company, he later moved into the consultancy sector, providing research, analysis and forecasting services tovehicle manufacturers, suppliers and regulatory authorities. He is editor of Automotive World's Automotive QuarterlyReview and the sister publication The World’s Car Manufacturers 9th Edition.

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Acknowledgements

A large proportion of Jonathan's work is carried out in partnership with Polk-Marketing Systems GmbH, which supplied much of the information for this report. Marketing Systems has provided planning and forecasting services tothe automotive industry for more than 25 years. Beginning with database and information systems, the company hasexpanded to provide a full range of forecasting and consultancy services.

Marketing Systems has its European headquarters in Essen, Germany, and offices in all the world's major vehicle mar-kets. Recognising the increasingly global nature of the business, Marketing Systems has formed a partnership with ThePolk Company of North America. The partnership's combined databases support the global information needs of themotor industry and are used regularly by all the industry's principal companies. The comprehensive and ever-expandingdatabases are maintained and developed by more than 1,600 professionals worldwide.

Contact details: Polk-Marketing Systems GmbH - Tel: +49 20 54 9333 00. Fax: +49 20 54 9333 12.

The author would like to express his thanks to all vehicle manufacturers that provided information for this report.

ISBN 1 84083 140 5

This work may not be photocopied or otherwise reproduced within the terms of any licence granted by the CopyrightLicensing Agency Ltd or the Publishers Licensing Society Ltd.This Management Report may not be reproduced in any form or for any purpose without the prior knowledge and con-sent of the publisher.

The views expressed in this report are not necessarily those of the publisher. While information, advice or comment isbelieved to be correct at the time of going to press, the publisher cannot accept any responsibility for its completenessor accuracy.

Printed and bound in Great Britain by IKON Office Solutions, London Document Services, 37-42 Compton Street,London EC1V 0AP.

LIST OF CONTENTS

List of contents .......................................................................................................................................................... iii

List of figures ............................................................................................................................................................. iv

Preface ........................................................................................................................................................................vii

Chapter 1: The global truck industry............................................................................................................1

Chapter 2: Truck demand in western Europe ..........................................................................................10

Chapter 3: DaimlerChrysler CV division...................................................................................................23

Chapter 4: Hino Motors .................................................................................................................................37

Chapter 5: Isuzu Motors .................................................................................................................................46

Chapter 6: Iveco ...............................................................................................................................................53

Chapter 7: MAN Nutzfahrzeuge ..................................................................................................................63

Chapter 8: Mitsubishi Fuso Truck & Bus ...................................................................................................73

Chapter 9: Navistar International Corporation ........................................................................................74

Chapter 10: Nissan Diesel.................................................................................................................................83

Chapter 11: Paccar .............................................................................................................................................90

Chapter 12: Renault Véhicules Industriels ..................................................................................................99

Chapter 13: Scania............................................................................................................................................101

Chapter 14: Volvo Trucks & Buses ..............................................................................................................109

Chapter 15: Other truckmakers....................................................................................................................124

Appendix 1: Methodology & exchange rates .............................................................................................138

Appendix 2: Western Europe market data .................................................................................................146

Appendix 3: US market data...........................................................................................................................164

Appendix 4: Financial statistics in euros (spreadsheet on disk)

Appendix 5: Financial statistics in native currency (spreadsheet on di k) sAppendix 6: Assembly plant data (spreadsheet on disk)

Appendix 7: Miscellaneous data (spreadsheet on disk)

Appendix 8: Exchange rates (spreadsheet on disk)

The World's Truck Manufacturers - an operating & financial review, 2006 edition

LIST OF FIGURES

Figure 1 : New truck sales worldwide by region, 1997-2005 1 Figure 2 : Aggregate unit sales & operating profit of Europe's major truckmakers (1) 3 Figure 3 : Revenue of the major truckmakers, 2004 4 Figure 4 : Unit revenue of the major truckmakers, 2004 5 Figure 5 : Average operating margins of the major truckmakers, 2001 to (estimated) 2005 (1) 6 Figure 6 : Average operating margins of the major truckmakers, 1996 to (estimated) 2005 (1) 6 Figure 7 : Truck production by manufacturer, 2004 8 Figure 8 : Quarterly truck & bus reg's - western Europe 11 Figure 9 : New truck & bus reg's in western Europe 12 Figure 10 : Truck & bus demand in western Europe (1982-2009) 13 Figure 11 : Shares of West European truck market (%) 14 Figure 12 : The fundamentals of truck demand 16 Figure 13 : Freight & GDP growth in western Europe (1970-2030) 17 Figure 14 : EU freight by mode 18 Figure 15 : EU road tractor parc (1970-2004) 20 Figure 16 : EU Emission Standards for HD Diesel Engines 21 Figure 17 : Latest results - DC 24 Figure 18 : DC CVs revenue & operating profit trend 25 Figure 19 : DC revenue by division 27 Figure 20 : DC commercial vehicle sales by market 31 Figure 21 : DC market shares, western Europe (%) 32 Figure 22 : DC European CV range (>3.5t) 33 Figure 23 : Latest results - Hino 38 Figure 24 : Hino revenue & operating profit trend 39 Figure 25 : Hino net income trend 39 Figure 26 : Hino sales 42 Figure 27 : Latest results - Isuzu 47 Figure 28 : Isuzu revenue & operating profit trend 48 Figure 29 : Isuzu net profit trend 48 Figure 30 : Isuzu unit sales by region 51 Figure 31 : Latest results - Fiat Group 54 Figure 32 : Iveco revenue & operating profit trend 55 Figure 33 : Iveco net income trend 55 Figure 34 : Fiat Group revenue by division (%) 56 Figure 35 : Iveco unit sales by market 57 Figure 36 : Iveco's share of W. European truck markets 58 Figure 37 : Iveco's product range 60 Figure 38 : Latest results - MAN Nutzfahrzeuge 64 Figure 39 : MAN Nutzfahrzeuge revenue & operating profit trend 65 Figure 40 : MAN Nutzfahrzeuge net profit trend 65 Figure 41 : MAN Group revenue by division 66 Figure 42 : MAN Nutzfahrzeuge unit sales: 67 Figure 43 : MAN market shares, western Europe (%) 68 Figure 44 : MAN's product range 69 Figure 45 : Latest results - Navistar 75 Figure 46 : Navistar revenue & operating profit trend 76 Figure 47 : Navistar net profit trend 76


Figure 48 : Navistar revenue & profit contribution by division 78 Figure 49 : Navistar unit sales 80 Figure 50 : Latest results - Nissan Diesel 84 Figure 51 : Nissan Diesel (unconsolidated) revenue & operating profit trend 85 Figure 52 : Nissan Diesel (unconsolidated) net profit trend 85 Figure 53 : Nissan Diesel revenue by division (%) 86 Figure 54 : Nissan Diesel, unit sales 88 Figure 55 : Latest results - Paccar 91 Figure 56 Paccar (Manufacturing) revenue & operating profit trend 92 Figure 57 : Paccar net profit trend 92 Figure 58 : Paccar revenue & profit by division 93 Figure 59 : Paccar's share of W. European truck market (%) 95 Figure 60 : Daf's product range 96 Figure 61 : Latest results - Scania 102 Figure 62 : Scania revenue & operating profit trend 103 Figure 63 : Scania net profit trend 103 Figure 64 : Scania revenue by division (%) 104 Figure 65 : Scania unit sales by market (trucks & buses) 105 Figure 66 : Scania European market shares (%) 106 Figure 67 : Scania product range 106 Figure 68 : Latest results - Volvo 110 Figure 69 : Volvo truck & bus revenue & operating profit trend 111 Figure 70 : Volvo Group revenue by division 112 Figure 71 : Volvo group truck sales by market 113 Figure 72 : Renault brand share of W. European truck market (%) 114 Figure 73 : Volvo brand share of W. European truck market (%) 115 Figure 74 : Volvo group share of W. European truck market (%) 116 Figure 75 : Volvo's European product range 118 Figure 76 : RVI's European product range 118 Figure 77 : Spreadsheet structure 138 Figure 78 : Spreadsheet structure 139 Figure 79 : Exchange rates - units of currency per euro 144 Figure 80 : Value of export earnings in foreign currency 145 Figure 81 : New truck & bus registrations, Austria 146 Figure 82 : New truck market shares, Austria (%) 147 Figure 83 : New truck & bus registrations, Belgium & Luxembourg 148 Figure 84 : New truck market shares, Belgium & Luxembourg (%) 149 Figure 85 : New truck & bus registrations, France 150 Figure 86 : New truck market shares, France (%) 151 Figure 87 : New truck & bus registrations, Germany 152 Figure 88 : New truck market shares, Germany (%) 153 Figure 89 : New truck & bus registrations, Italy 154 Figure 90 : New truck market shares, Italy (%) 155 Figure 91 : New truck & bus registrations, Netherlands 156 Figure 92 : New truck market shares, Netherlands (%) 157 Figure 93 : New truck & bus registrations, Portugal 158 Figure 94 : New truck market shares, Portugal (%) 159 Figure 95 : New truck & bus registrations, Spain 160 Figure 96 : New truck market shares, Spain (%) 161


Figure 97 : New truck & bus registrations, UK 162 Figure 98 : New truck market shares, UK (%) 163 Figure 99 : US truck sales by weight class 164 Figure 100 : US weight classes 164 Figure 101 : US truck sales by weight class & manufacturer 165 Figure 102 : US manufacturer shares by weight class 166


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PREFACE

About this report

The primary objective of the report is to provide comprehensive and consistent information on the financial and operating performances of the world’s major truck producers. This information is complemented by analysis and commentary, which highlight the pertinent aspects of the wealth of data included, and provide a guide to some of the pitfalls encountered when interpreting the data.

The backbone of the report is the appended database of financial statistics and performance ratios covering the world’s major truck manufacturers and their subsidiaries from 1983 onwards. This comprehensive database is designed to present information in a clear and consistent format, to enable users to analyse and compare the operating performances of a wide range of automotive companies over a statistically significant period.

I hope you will find the report meets my aims and your expectations.

Jonathan Storey


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CHAPTER 1: THE GLOBAL TRUCK INDUSTRY

GLOBAL DEMAND

2004

In 2004 global sales of trucks in the 6t-plus GVW category soared by xx% to x.xxm units. The increase reflected growing demand in all major regions of the world, led by Asia and Nafta.

In unit terms, the largest regional increase occurred in Asia, where truck sales rose by xxx,xxx units to xxx,xxx units, as sales in China recovered strongly to xxx,xxx units having fallen slightly the previous year.

In Nafta the cyclical upturn which began in 2003 gathered momentum in 2004 and sales of Class 4-8 trucks rose by xx% to xxx,xxx units. The increase was led by the Class-8 sector which grew by xx% to xxx,xxx units.

The demand cycle in western Europe often appears to lag that of Nafta by about one year. This was certainly the case in the recent downturn which western Europe entered one year after Nafta and emerged from one year later. Thus 2004 marked the first year of a cyclical upturn with a 9.2% rise to xxx,xxx units.

Figure 1: New truck sales worldwide by region, 1997-2005

Region 1997 1998 1999 2000 2001 2002 2003 2004 2005 (e ) 2006 (f)(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)

Western Europe xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x

Increase / (Decrease) % (x.x) xx.x xx.x x.x (x.x) (x.x) (x.x) x.x x.x x.x

Eastern Europe xx.x xx.x xx.x xx.x xx.x xx.x xx.x xxx.x xxx.x xxx.x

Increase / (Decrease) % (x.x) (xx.x) (xx.x) xx.x x.x x.x x.x xx.x x.x x.x

Nafta xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x

Increase / (Decrease) % x.x xx.x xx.x (x.x) (xx.x) (x.x) x.x xx.x xx.x x.x

Asia xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x xxx.x

Increase / (Decrease) % (xx.x) (xx.x) x.x xx.x xx.x xx.x x.x xx.x x.x x.x

Latin America xx.x xx.x xx.x xx.x xx.x xx.x xx.x xxx.x xxx.x xxx.x

Increase / (Decrease) % xx.x (x.x) (xx.x) xx.x (x.x) xx.x x.x xx.x (x.x) (x.x)

Oceania xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x

Increase / (Decrease) % x.x x.x xx.x x.x (x.x) xx.x xx.x xx.x x.x (x.x)

Middle East xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x

Increase / (Decrease) % x.x (xx.x) (xx.x) xx.x x.x (xx.x) xx.x xx.x x.x (x.x)

Africa xx.x x.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x xx.x

Increase / (Decrease) % (xx.x) (x.x) xx.x xx.x x.x x.x xx.x xx.x xx.x (xx.x)

World x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x x,xxx.x

Increase / (Decrease) % (x.x) (x.x) x.x x.x (x.x) x.x x.x xx.x x.x x.x

Sources: Polk-Marketing Systems, OEMs and other, including estimates


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CHAPTER 2: TRUCK DEMAND IN WESTERN EUROPE

NEW REGISTRATIONS - HISTORY

2004

New truck registrations in western Europe rose by x.x% in 2004 to xxx,xxx units. The increase brought to an end the three year cyclical downturn which began in 2001 following record truck demand in the four years to 2000.

The 2004 new registration figure was within x.x% of the first forecast for 2004 which we published in 2000. It was within x.x% (x,xxx units) of our October 2002 forecast.

The x-year downturn took the West European truck market down by just xx% from its xxxx level, a mild decline by historical standards and far less severe than the drop in North American truck sales which fell by xx%, xx% and xx% in 2000, 2001 and 2002. In the US heavy (Class-8) market the decline was sharper still, with a drop of over xx% from 1999 to 2001.

The relatively mild decline in western Europe mainly reflects the asynchronous nature of the demand cycles within individual markets, with demand during 2003 rising in five of the market regions covered and falling in six.

The flipside of this mild downturn is that the cyclical upturn. is also likely to be fairly gentle.

There was little variation in the quarterly pattern of new registrations during 2004, with demand in each quarter rising above year-ago levels by x-xx%. The sharpest increase of xx% occurred in Q4-2004.

However, towards the end of the year a number of manufacturers were making less positive comments about their order books and these comments form part of the basis for our forecast that demand will increase more slowly in 2005.

Within the major markets the pattern of demand was mixed. A few years ago we wondered whether the advent of the single market would bring greater homogeneity to the pattern of demand in Europe. The answer for the moment is firmly negative, partly due to different macro-economic conditions but also due to unique micro-factors in the different markets.

2005

In 2005 new truck registrations in the region rose by about 6% (some data still at provisional status) and bus demand rose by about x.x%.

This was in line with the forecast in last year's edition of this report and reflects continuing strong demand for road freight despite slower than expected economic growth in the region.

Sectoral demand

The sub-16t sector grew 4.8% to xxx,xxx units in 2004 following 4 years of decline. It rose a further x.x% to xxx,xxx units in 2005 but remains significantly below its 1991 peak of xxx,xxx units.

The 16t-plus sector rose by x.x% to xxx,xxxunits in 2004 and x% to xxx,xxx units in 2005, slightly exceeding its 2000 peak of xxx,xxx units.

The road tractor segment has increased most, rapidly, growing by xx.x% in 2004 and a further x.x% in 2005 to xxx,xxx units.


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CHAPTER 3: DAIMLERCHRYSLER CV DIVISION

OVERVIEW

In terms of units produced, DaimlerChrysler (DC) is the world's fifth largest carmaker, its largest truckmaker and its largest commercial vehicle producer. In 2005 the company sold xxx,xxx (2004: xxx,xxx) commercial vehicles, of which some 509,000 were trucks.

DC is thus unique in being a globally significant and independent OEM in both the car and truck sectors of the industry - not that this has done the company’s bottom line many favours so far.

Many other OEMs have competed in both industry sectors over the years but have found the synergies to be few and failed to achieve critical mass in one or other sector. Consequently, over the past twenty years the trend has been for the weaker business to be divested.

DC has played a major buy-side role in this process. Various purchases over the years have endowed it with a portfolio of nine truck and bus brands, most notably Freightliner, acquired in the 1980s, Sterling, (formerly Ford's North American heavy truck business) acquired in 1998 and most recently Mitsubishi Fuso Truck & Bus (MFTB) in which DC now has an xx% stake.

The MFTB acquisition was a groundbreaking development in the consolidation of the world's truck industry with DC becoming the first western truckmaker to acquire majority control of a major Asian truckmaker. The acquisition boosted DC's 2004 sales by xxx,xxx units.

However, during 2004 MFTB incurred substantial losses due to the costs and ramifications of a massive recall campaign which was initiated when it emerged that MFTB had, for some years, failed to disclose known vehicle defects to the authorities (see later discussion).

During 2004 DC's other Asian alliance, that with Hyundai Motor, unravelled. The plans for DC to acquire a xx% stake in HMC's truck division and for joint production of CV engines have been abandoned.

The performance of DC's commercial vehicles division is known to have been weak for many years although the results have only been disclosed since 1996. During the nine years to 2004 the division made an operating loss in three years and an average operating margin of x.x% during the six years it was profitable.

Given the substantial drop in the US heavy truck market from 1999and the less dramatic downturn in western Europe, it is no surprise that the division’s results were weak. But downturns are a regular and fairly predictable feature of the truck industry. All the industry players know it and they need to gear their operations around that inescapable fact.

The CV division is usually one of the DC Group’s weaker performers, with an average return on net assets (RONA) of x.x% in the eight years to 2004.

This average figure is below DC's current hurdle rate of xx%. The hurdle rate was exceeded in only four of the past eight years. By contrast the Mercedes-Benz passenger car division has generated an average return around xx% over the past eight years.

Previous editions of this report have suggested the company should consider the demerger of the CV division. This would conform to the already mentioned trend for OEMs to focus on either car or truck production. However, DC's presence in both sectors rarely seems to attract comment by shareholders or industry commentators.


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CHAPTER 4: HINO MOTORS

OVERVIEW

Hino Motors develops, manufactures and markets diesel trucks and buses in Japan and other (primarily Asian) markets. In Japan it has been the market leader in the medium to heavy truck sector for more than thirty years. The domestic market typically accounts for xx-xx% of Hino's truck and bus sales. In revenue terms, the proportion contributed by domestic operations is even higher (around xx% in 2004/05), due to the income generated by work performed on behalf of Toyota, Hino's majority shareholder.

During the eighties and early nineties, Hino ranked as one of the world's top producers of trucks above 6t GVW. Producing xx-xx,xxx trucks per year the company vied with Navistar for second place, a long way behind industry leader, Daimler-Benz (as was). The slump in demand in Japan during most of the nineties and the sharp downturns in other Asian markets in 1997/98, caused Hino's output to fall by more than xx% from its 1989-91 peaks but the recovery in Japanese demand since 2003 has seen its output climb to xx,xxx units, putting it in eighth place worldwide (see Figure 7).

Hino's profit margins were unimpressive before the slump in demand so such a precipitous decline in sales inevitably caused the company to slide into the red. The year to March 1999 saw its first net loss since listing on the Tokyo Stock Exchange in 1949. Further net losses were incurred in the following two years and the company finally returned a positive net result in the year to March 2002. It remained profitable in the following two years, though over the ten years to March 2005, Hino made a cumulative net profit of just ¥xx.xbn, a margin on cumulative revenue of x.x%.

During its period of declining performance Hino had the benefit (if 'benefit' is the right word) of a long-term principal shareholder, Toyota, to ward off the threat of takeover by domestic or foreign competitors. The association between the two firms dates back to the 1960s and during Hino's difficulties Toyota injected funds, increasing its equity stake from xx% in 1998 to over xx% during 2001.

We raise the question as to whether the link with Toyota has been truly beneficial because while it has undoubtedly offered Hino a welcome security blanket, particularly during the downturn it appears that thus protected, Hino's attempts to restructure and regain profitability have lacked the necessary urgency and vigour.

It seems that Toyota shared this view. Once it acquired majority control Toyota installed one of its own vice-presidents, Tadaaki Jagawa, as Hino's new president. Despite the long association between the two companies Mr Jagawa was the first Toyota employee to be appointed to the position – illustrating its previous hands-off approach. Mr Jagawa was given a brief to make rapid changes to bring the new subsidiary closer to the profit levels achieved by the rest of the group. He talked of a shift to offensive management in describing his approach to rehabilitating the firm – the implicit criticism being that management had previously been too passive.

Mr Jagawa (now chairman of the board) formulated a five-point plan to reduce costs, lower debt and expand the business. This has helped the company to return to profit in its last four financial years.


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CHAPTER 5: ISUZU MOTORS

OVERVIEW

Isuzu is a producer of trucks, diesel engines and recreational vehicles (RVs). In the last three fiscal years its worldwide sales have averaged xxx,xxxupa, about xx% of which have been light trucks, including SUVs and pickups. In Japan Isuzu's Elf range is the market leader in the light-duty truck sector.

In the past Isuzu also produced passenger cars but it was too small to compete effectively and decided during 1992 that it would no longer develop and produce passenger cars independently, concentrating instead on the three areas mentioned above.

However, the prolonged slump in truck demand in Japan, the Asian economic crisis and increased competition in the RV sector all combined to keep the company struggling, and often failing, to turn a profit.

During the ten years to March 2003 Isuzu made a cumulative net loss of ¥xxxbn and reported a net loss in each of the last four years of that period.

During this troubled decade Isuzu was helped by its affiliation with GM. The relationship dates back to 1971 when the US company acquired a xx.x% stake in Isuzu. Since then the two firms have co-operated in various discrete joint ventures, such as the IBC operation in the UK (now wholly owned by GM).

In March 1999 GM increased its stake to 49% and this was followed by a Isuzu becoming more closely integrated in the GM production network. For example it was given global responsibility for the development of GM’s diesel engines and commercial truck development.

Despite these changes and various restructuring measures, Isuzu's performance remained weak and during 2002 there was a real fear that the company would be unable to meet its debt repayment schedule and become insolvent.

It became apparent that a more radical restructuring was required, one that addressed Isuzu's corporate and financial structure as well as the usual operational measures to improve efficiency through reductions in staff, material costs etc.

Thus in August 2002 Isuzu announced a number of revisions to its existing x-year plan. The key points of the new programme were: • selling to Fuji Heavy Industries (Subaru)

Isuzu's xx% share in Subaru-Isuzu Automotive - their North American SUV joint venture;

• forming a powertrain joint venture with GM, into which all the existing engine joint ventures are incorporated and GM will take a majority stake;

• GM cancelling its existing Isuzu equity and resubscribing for a xx% stake;

• a debt-for-equity swap.

The effect of these measures, coupled with improving demand in Isuzu's key markets, are already starting to be seen in the company's results - in the years to March 2004 and 2005 it reported net profits and respectable operating margins of x.x-x.x%.

This is not a remarkable figure by the standards of the world's truck industry as a whole, but for a company whose highest full-year operating margin over the previous xx years was x.x%, the figures are very encouraging.

In November 2004 Isuzu announced a fresh 3-year plan. It aims to expand its commercial vehicle and diesel engine businesses on a global basis. The targets for the year to March 2008 are revenue of ¥x,xxxbn and operating profit of ¥xxxbn, a margin of x.x%.


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CHAPTER 6: IVECO

OVERVIEW

Iveco, the commercial vehicle division of the Fiat Group, is the product of a consolidation process which extends back to xxxx. That was the year Fiat acquired control of OM. Control of France’s Unic and Lancia followed in the xxxxs and in 1975 Iveco was formed by the integration of: Fiat Veicoli Industriali, Lancia Veicoli Industriali, OM, Unic and Magirus Deutz of Germany, a Klockner Humboldt Deutz (KHD) company which joined Iveco in return for a 20% equity stake in the combined group.

The rationale for Iveco’s formation was clear: the five companies/divisions were too small and nationally concentrated to compete effectively at a European level, still less at a global level. Magirus Deutz was an entirely independent company with its own product range and manufacturing facilities but even Fiat’s own truck divisions were operated as discrete entities with no product overlap or significant pooling of resources, so the potential for economies of scale and rationalisation was high.

That rationalisation of products and manufacturing facilities took most of the ensuing two decades to achieve, partly as a result of having to accommodate the later acquisitions of Ford’s UK truck operations, Astra in Italy, Pegaso in Spain and Seddon Atkinson in the UK.

The launch of the Euro range, starting with the EuroCargo in 1991 and completed with the introduction of the EuroStar in 1993, marked the full integration of Iveco’s disparate divisions and the Euro range has recently completed its first major renewal.

Iveco is by far the smaller of Fiat's two vehicle divisions in terms of revenue, assets or employment. Over the past ten years its cumulative revenue was just 32% of that generated by Fiat Auto. However, during that decade Iveco has usually been the more profitable of the two divisions. Fiat Auto’s massive losses over the past four years have accentuated this trend.

The current troubles in Fiat Auto have distracted attention from the fact that Iveco performed relatively well in the recent industry downturn and the near completion of its product renewal programme means its growth prospects for the next few years are good. It also means that the company should generate more free cash in the coming years as its capital expenditure falls from 7.4% of revenue (average 2000-2002) to around 3-4% over the next few years.

Although it has not undergone any further significant expansion by acquisition, during the late eighties and the nineties Iveco was active in developing alliances, generally either in order to penetrate new markets or to share the costs of product development.

The Fiat group itself has undergone substantial change in recent years, as non-core businesses have been divested and the core business sectors have been boosted by acquisitions and alliances.


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CHAPTER 7: MAN NUTZFAHRZEUGE

OVERVIEW

MAN Nutzfahrzeuge is the truck and bus division of MAN AG, the German industrial conglomerate. It is the largest division within the group in terms of revenue, employees and (usually) profit contribution. The truck division is mostly focused on west European markets and typically xx-xx% of its output is in the xxt-plus sector. MAN was the world’s eleventh largest truck producer in 2004 and the thirteenth largest bus and coach producer. The following discussion focuses solely on MAN Nutzfahrzeuge unless otherwise stated.

From its origins in the xxxx's until the end of the 20th century, MAN's growth was mostly self-generated, though there were exceptions:

Büssing, a long-established truck and bus builder based in Braunschweig, was taken over by MAN in xxxx. The Büssing logo, the Braunschweig lion, is still incorporated in the MAN grille badge.

In xxxx MAN acquired the truck-building business of Steyr (Austria) having previously acquired Österreichische Automobilfabrik (ÖAF) Gräf & Stift - a specialist vehicle builder.

During xxxx MAN acquired two small truckmakers: ERF the UK producer and Star, based in Poland. Also during xxxx MAN announced its plan to take over Neoplan Bus (formerly Gottlob Auwärter) the German bus manufacturer. The acquisition was completed in July xxxx following approval by the competition authorities. These acquisitions increased to six, the number of brands controlled by the division (MAN, Steyr, ÖAF, ERF, Star and Neoplan).

MAN had a successful run during the nineties, increasing its share of the West European sub-16t and 16t-plus sectors. The improvement reflected the success of its L2000, M2000 and F2000 trucks, introduced between xxxx and xxxx. It also reflected a push by MAN to reduce its dependence on the German and Austrian markets. In 1993 and 1994 some xx% of MAN’s West European sales took place in Germany and Austria. By 2004 this figure had reduced to xx%.

The sales success has helped MAN to remain profitable at the operating level from 1990 to 2003 with an average operating margin of x.x%. However, it reported net losses in 2001 and 2002 as the European truck market turned down and it was adversely affected by accounting irregularities at ERF and production problems with the recently launched TG-A range.

Following this downturn the company made a good recovery in 2003 and its earnings growth gained momentum in 2004.

Previous editions of this report have commented that if further scale economies are sought MAN would be likely to negotiate project-specific ventures with other truckmakers or suppliers. This type of collaboration seems more likely to succeed for MAN than trying to acquire or merge with another large truckmaker.

Over the past three years MAN has announced several such joint ventures, the main ones being with Scania, Navistar and India's Force Motors.


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CHAPTER 8: MITSUBISHI FUSO TRUCK & BUS

OVERVIEW

Mitsubishi Fuso Truck & Bus came into being in January 2003 when it was spun off as an independent entity by Mitsubishi Motors Corporation.

Two months later, DC (a xx% shareholder in MMC) bought a xx% stake in MFTB as previously agreed. MMC had a xx% stake and other Mitsubishi group companies held the remaining xx%.

In March 2004 DC took a further xx% of MFTB taking its stake to xx% and MFTB became a consolidated subsidiary of the German firm.

The aggregate amount paid by DC for its xx% controlling interest in MFTB was €x,xxxm. MFTB made net profits of ¥x.xbn (€xxm) and ¥xx.xbn (€xxxm) in the years to March 2003 and 2004 respectively.

During 2003 and 2004 it emerged that like MMC, MFTB had been guilty of concealing vehicle defects from the authorities. The affected vehicles (about xxx,xxx) had to be recalled for safety checks and remedial work.

In March 2005 DC and MMC reached a final agreement over compensation. The agreement mainly entailed: a cash payment from MMC to DC; the transfer of MMC’s xx% stake in MFTB to DC (taking DC's stake to xx%); the agreement that MMC will continue to maintain xxx% ownership of NedCar; additional co-operation between MMC and MFTB in various other areas.

SALES & MODELS

For the year to March 2006, MFTB expects sales of xxx,xxx units, an increase of about x% over the xxx,xxx units sold the previous year.

In Japan, Fuso expects sales of approximately xx,xxx units, a x% increase. Overseas sales are forecast at around xxx,xxx units, x% higher and a new record for the company.

In Japan MMC's truck range is marketed under the Fuso brand. The range comprises:

Canter - badged with FB, FC, FD, FE, FF or FG prefixes, light duty trucks, x.x-x.xt GVW. In June 2002 the new generation Canter (x-x.xxt payload) and Canter Guts (x.xx-x.xxt payload) made their market debuts in Japan. This marked the first full model change for the Canter in x½ years. In 2005, the new Canter debuted in Europe and other export markets. Fuso will launch a hybrid version of the Canter on the Japanese market in 2006.

Fighter - a new Fighter range was launched in Japan in October 2005. It spans the GVW range x.x-xx.1t. The range is badged with FH, FK, FL or FM prefixes.

Super Great - launched in 1996, badged with FP, FS, FT, FU or FV prefixes, heavy range xx.x-xx.xt GVW.

NOTES UPON FINANCIAL STATISTICS

MFTB's financial year runs to March 31st. Only limited data was published and since the company became a consolidated subsidiary of DC its results are no longer available.

Data in the appendices is shown for MMC also but this includes MMC's car operations.

Data from MMC's consolidated accounts are shown from xxxx onwards. Prior data refers to the non-consolidated accounts.

Other discussion upon MFTB is now included under DC.


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CHAPTER 9: NAVISTAR INTERNATIONAL CORPORATION

OVERVIEW

Navistar operates in three industry sectors: trucks (including school buses), engines and financial services. In its financial year ending October 2004 it sold xxx.xxx trucks and school buses and xxx,xxx engines to other manufacturers.

Selling vehicles under the International brand, Navistar is the leader in the US market for class x-x trucks (x.x-xx.xt). Worldwide sales of its Class 6-7 trucks were xx,xxx units, sales of Class-8 trucks rose to xx,xxx units and school bus sales totalled xx,xxx units.

Navistar implemented a significant restructuring in the mid-1990s in a bid to reduce its dependence on North American truck demand and the consequent volatility of its earnings. The company had acquired a reputation for profits falling off a cliff when truck demand turns down. It suffered four years of operating and net losses from 1990-1993 as it was hit by the cyclical downturn and had a similarly weak start to the eighties.

Navistar’s weak reputation was reinforced by comparisons with its principal rival, Paccar, which has remained profitable throughout the past xx years.

Under the leadership of John Horne, who became president in 1990 and CEO in 1995, Navistar's performance substantially improved. On the operational side, profitability was boosted by reducing product and manufacturing complexity and by achieving competitive wage, benefit and productivity levels.

While restructuring and optimising the core business, Navistar also made strategic changes: boosting the importance of its engine business; expanding internationally; forming a partnership with Ford to supply engines and to build medium-duty trucks.

These initiatives were mostly introduced by Daniel Ustian who began succeeding John Horne in 2002 and is now Navistar's chairman, president and CEO.

Since taking over Mr Ustian has shown a continuing enthusiasm for taking the company in new directions. Among other things he has:

launched a giant pickup for the consumer market; developed a vehicle intended to replace the Humvee for the US military; begun developing a heavy-duty engine; increased the company's international presence through alliances.

In theory the company should now be less vulnerable to cyclical downturns. The operational changes have given it more flexibility in its cost structure and the strategic changes have led to a substantial proportion of earnings being generated by the medium truck and engine businesses which are seen as offering less volatility than the heavy truck business. Similarly Navistar is targeting the military sector for its contra-cyclical features.

The validity of this theory remains untested although we can conclude that the contra-cyclical side of the business was not sufficiently developed to prevent red ink in the 2000-2002 downturn. It reported a small net loss in the year to October 2001, a larger loss the following year, albeit distorted by non-recurring charges and disruption from strike action and another small loss in the year to October 2003.

It returned to profit in the year to October 2004 and is expected to report a further profit for 2004/05 but its results have been delayed so were not available at the time of writing.


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CHAPTER 10: NISSAN DIESEL

OVERVIEW

Nissan Diesel, as it is now called, was established in 1935 under the name of Nihon Diesel Industries to produce diesel engines and introduced its first line of trucks in 1940. It now offers a range of light, medium and heavy duty trucks as well as buses, bus chassis, engines, components and special purpose vehicles.

In the year to March 2005 the company sold xx,xxx own-brand vehicles and produced a further 37,100 light trucks under contract for Nissan Motor. This level of output was similar to the previous year but still some xx% lower than ND’s peak output of xxx,xxx units in 1991.

The decline in sales since the early nineties brought to the fore, many problems with ND’s structure, processes and underlying philosophy. The company, typically referred to in newspaper reports as 'beleaguered', 'ailing' or 'struggling' used to provide a good example of how Japan's keiretsu system can engender ineffective managements and inhibit the fresh, bold thinking necessary to maintain competitiveness.

With Nissan Motor as its principal shareholder Nissan Diesel was protected from the sort of scrutiny and accountability which would probably have enabled its many problems to be addressed much earlier - or put it out of business.

ND’s problems were of course substantially exacerbated by the Asian downturn and the continuing low level of truck demand in Japan. However, the problems pre-dated those events - it had long been a sloppily managed inadequate performer which, if subject to normal commercial pressures, would have lost its independence some time ago.

The data in the appendix shows Nissan Diesel to have generated an average operating margin of 0.8% over the sixteen years to March 1998 (i.e. before the Asian downturn), with a peak margin of 2.2% during that time. In only one of those years was the company's operating profit sufficient to cover its interest payments.

Similarly, return on equity during the sixteen years to March 1998 averaged x.x% with a peak of xx.x%. At rival Hino, the return on equity was more than twice as high.

Over the past 5-6 years ND has made a concerted effort to improve efficiency and lower its debt burden and it has been largely successful. Interest-bearing debt at the end of March 2005 had been reduced to about ¥xxxbn from Yxxxbn four years before. The company thus beat its target of reducing debt to ¥xxxbn or less by the year to March 2005.

Some of the debt reduction was achieved through a ¥xxxbn bailout by its three main lenders and Nissan Motor in a debt-for-equity swap. Nissan Motor now holds a xx.x% stake in ND.

Various restructuring measures helped ND to return to profit for the first time in four years in the year to March 2001 and it remained in the black the following year, but in 2002/03 and 2003/04 it reported net losses, partly due to non-recurring factors. However, it returned to profit in 2004/05 and earned a respectable operating margin of x.x%.

During 2003, ND and Nissan Motor announced plans to jointly develop and produce light trucks. ND has also formed a joint venture with Nissan Motor's Chinese partner, Dongfeng.


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CHAPTER 11: PACCAR

OVERVIEW

Paccar is now the third largest manufacturer of heavy duty trucks in the world, having been ousted from second place by Volvo's takeover of RVI. It is the sixth largest producer of trucks above 6t. In 2004 it sold xxx,xxx trucks of 6t-plus, some xx% above the previous year.

In the US Paccar is number two in the Class-8 segment, having regained this spot from the Volvo Group.

The company used to derive more than xx% of its revenue from sales in the USA and Canada where it operates under the Kenworth and Peterbilt brand names.

However its geographical spread was altered significantly towards the end of 1996 when it acquired Daf, the Netherlands based truck producer. Along with Foden, the low-volume, UK based heavy truck producer acquired by Paccar in 1980, this has given Paccar a xx-xx% share of the west European heavy truck sector and an 8-9% share of the light/medium sector over 6t.

At the time Paccar bought Daf the Dutch firm was operating profitably following its collapse in 1993 and subsequent restructuring with the assistance of the Dutch and Belgian governments.

Daf has since gone from strength to strength and this has enabled Paccar to build upon its record of having generated a profit every year for over xx consecutive years.

This would be a creditable achievement in any industry but for a company exposed to the marked cyclical swings of the truck industry, particularly the North American heavy truck sector, it is a remarkable feat.

Paccar's purchase of Daf can be seen as having kicked off the recent round of industry consolidation, followed as it was by alliances or takeovers involving:

• DC - Hyundai, MMC, Sterling and Western Star;

• MAN - ERF and Star; • Volvo - RVI and MMC (subsequently

terminated); • Scania - Hino and VW.

Having got the ball rolling, Paccar has looked in danger of being left behind as the rate of consolidation gained momentum, especially as other manufacturers take advantage of the buying opportunities being presented by the troubled Asian truckmakers.

In April 2000 the company's chairman acknowledged that Paccar was considering acquisition opportunities "with a sense of urgency", the comment being sparked by the news of the Volvo/RVI merger.

There have been no tangible developments since that time and Paccar's "sense of urgency" mostly had to be directed towards dealing with the severe downturn in the US heavy truck market. The company acted quickly to reduce costs, staying profitable during the downturn and reporting substantial profit increases now that the US market has entered its up-cycle.

Speaking during 2004 Paccar's chairman, Mark Piggott, said that acquisition or partnership with the right company could aid Paccar's growth strategy. However, he thought it more likely that organic growth would give a better rate of return.

Paccar has long had a very healthy cash surplus in its manufacturing operations, amounting to about $x.xbn in December 2005. Previous editions of this report have commented that in the absence of any major investment, such as an acquisition, the company will soon start to be pressed to return some of its surplus funds to shareholders.


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CHAPTER 12: RENAULT VÉHICULES INDUSTRIELS

OVERVIEW

The commercial vehicles division was Renault Group's second largest, contributing xx.x% of group revenue in 2000. The division was formed in 1978 when, under a government initiative, Renault's existing truck subsidiary, Saviem, was merged with Berliet to form RVI. The US company Mack Trucks became a consolidated subsidiary of RVI in 1990, the two companies having developed a technical alliance during the preceding 4-5 years.

RVI (including Mack) produced a record xx,xxx trucks in 2000, including x,xxx vehicles below 5t. In terms of heavy trucks, the company's output of xx,xx vehicles put it in fourth place worldwide.

Volvo announced in April 2000 that it was to acquire xxx% of RVI's equity in exchange for Renault taking xx% of Volvo's shares. Renault was to buy a further x% of Volvo's equity on the open market. The transfer of ownership took place on January 2, 2001, following approval by the competition authorities in Europe and the US. At the time of the initial agreement RVI's xx% stake in Volvo was worth about €x.xbn.

This looked like an excellent move for both Renault and Volvo. The combined group became the second largest heavy truck producer in the world. Volvo/RVI is a clear market leader in the European heavy truck sector. In the US RVI/Volvo is the third best-selling group in the Class 8 market, behind DaimlerChrysler and Paccar.

The expected benefits of the alliance are the familiar ones of scale economies in development, purchasing, manufacturing, investment and marketing. The new alliance rejuvenated some elements of the broader alliance planned by Renault and Volvo back in 1993, which failed due to resistance by Volvo's shareholders. Indeed it was only in 1997 that Volvo disposed of the last of its shareholding in Renault, acquired at the time of the proposed alliance.

The only query we would raise is why Renault bothered to take a stake in Volvo instead of cash. Renault states that:

"As Volvo's largest shareholder, Renault would secure on a long-term basis its presence in the truck sector, under optimum conditions for both RVI/Mack's customers and employees, as well as for its shareholders, with strengthened prospects in terms of growth and profitability."

Renault's stake will also secure a presence in Volvo's other divisions: buses, construction equipment, marine & industrial engines and aerospace.

We may see Renault reducing its stake in Volvo in the future, but this is unlikely to happen within the next two or three years.

RVI PRESENTATION

The rest of the discussion upon RVI is now contained within the Volvo chapter.

NOTES UPON FINANCIAL STATISTICS

Renault's financial year runs to December 31st. The statistics in the appendix are presented for Renault Group and RVI. The consolidated accounts provide full information upon Renault Group with more limited disclosure for RVI. Renault's annual reports provided commendably comprehensive information on the key operating statistics.


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CHAPTER 13: SCANIA

OVERVIEW

Scania delivered xx,xxx trucks in 2005 and x,xxx heavy buses.

The origins of the company can be traced back to 1891 when VABIS (Vagnfabriks-Aktiebolaget i Södertelge) produced railway rolling stock. In 1902 Vabis and its competitor Scania, in southern Sweden, each built their first trucks. The two companies merged in 1911 to form Scania-VABIS. In 1921 the company was reorganised after declaring bankruptcy. During the thirties Scania-VABIS produced more buses than trucks but by the late forties had decided its future lay primarily in truck production. In 1969 it merged with Saab to form Saab-Scania.

Scania has grown almost entirely organically, establishing its first plant outside Sweden, in Brazil, during 1957. Seven years later a plant was built at Zwolle in the Netherlands and in 1976 bus and truck production began in Argentina.

International expansion accelerated in the 1990s as Scania acquired capacity in France, Poland, Mexico and Denmark.

During 1995 Scania became an independent company again when the Saab-Scania group to which it belonged was divided into Saab AB and Scania AB. This ended a x year period for Scania of being part of the same group as Saab. Saab-Scania AB had been a wholly owned subsidiary of Investor, the investment arm of the Wallenberg industrial empire, since 1991.

During 1996 Investor floated xx% of Scania's share capital in a public offering which was three times oversubscribed and placed a value of SKRxxbn on the company. The sale wiped out Scania's net debt at the end of 1995 of SKRxbn.

The flotation was well timed from Scania's perspective, as it came at a time of peak profitability with an operating margin of xx.x%. In the following five years the margin was, on average, x.xpts lower as the company was adversely affected by various factors including: launch costs for the new 4-Series; price competition in western Europe; the appreciation of the Swedish krona and the downturn in South America.

However, even at its reduced profit levels Scania has remained the most profitable of the world's major truckmakers in most years and has returned a profit in every year since 1934.

The company's consistently strong profit performance can be attributed to three long term features of its business strategy:

• a modular construction strategy, • it competes only in the heavy sector • organic growth.

Scania also claims that its profitability stems from its high level of vertical integration, with an added value of xx-xx% of each truck's price compared with xx-xx% for a low integration operation. However, Scania's main rival for the title of most profitable truckmaker is a manufacturer with just such a low-integration approach - Paccar.

Considering the company's record as one of the world's most consistently profitable truckmaker with a solid record of outperforming its rivals, it has had a surprisingly volatile time over the past few years with regard to its ownership structure.

First Volvo, then VW and then Hino have all emerged as either parents, suitors, possible suitors or just good friends - depending on who one asks and when one asks.

The Volvo connection has now been severed and although we are critical of VW's continuing stake it looks as though Scania's independence is no longer in question.


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CHAPTER 14: VOLVO TRUCKS & BUSES

OVERVIEW

Volvo is the world's third largest truckmaker and second largest heavy truck producer. It makes more trucks in Europe than any other producer. In 2005 it delivered xxx,xxx units worldwide of Mack, Renault and Volvo branded trucks. It also produced xx,xxx buses and bus chassis.

Towards the end of the nineties the Volvo group began reducing the breadth of its portfolio of industrial holdings and increasing its depth, concentrating on the automotive and transport vehicle industries, having previously acquired interests in a number of unrelated industry sectors.

This rationalisation process was taken a stage further in early 1999 when the car division was sold and Volvo's focus was narrowed to the following commercial transport industries:

• trucks; • buses; • construction equipment; • marine and industrial engines; • aerospace equipment.

It also has a financial services division.

The truck division is now the group's largest in terms of revenue and usually in profit terms as well, though not in 2000 and 2001 when its earnings were weak or negative.

Following the blocking of Volvo's bid for Scania (see Scania discussion) Volvo announced the proposed purchase of RVI from Renault in 2000. The deal provided for Volvo to acquire xxx% of RVI's equity in exchange for Renault taking xx% of Volvo's shares.

The rationale for such a move was little changed from that which applied when Renault and Volvo tried to merge in 1993. That merger would have had Volvo taking the lead role in the truck sector and Renault in cars and the logic for combining forces in the truck sector remained compelling. The deal was approved by the European and US competition authorities in 2000 and became effective on January 2, 2001.

Having finally succeeded in bolstering its strategic weight in Europe and North America, Volvo's Asian strategy promptly began to unravel. In April 2001 it was forced to sell its stake in Mitsubishi Motors (MMC) to DC, in recognition of DC's increasing control over the Japanese firm.

Volvo currently appears content to expand organically rather than by acquisition. Having not performed particularly well during the recent downturns in North America and Europe, the company needs to concentrate on the integration of the Mack, RVI and Volvo operations in order to take full advantage of the current upturn.

However, it may not be long before the company returns to the acquisition trail as it seeks to remain competitive with DC.

Now that Nissan Diesel has restructured and reduced its substantial debt burden it would be no surprise if Volvo were once again to run a slide rule over the company and assess its strategic fit. Volvo's links with Renault and Nissan (which until recently held a xx% stake in Nissan Diesel) put it in a good negotiating position.


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CHAPTER 15: OTHER TRUCKMAKERS

INTRODUCTION

As shown in Chapter 1, there are a large number of minor truck producers in the world, defined for present purposes as those producing fewer than 20,000 trucks per year. Many of these producers are dependent in one way or another upon one of the major producers and it is a safe bet that both the number and the extent of their dependence will increase in future.

A large proportion of the minor producers are in emerging markets and details of financial performance and key operating statistics are in many cases non-existent, unreliable or unavailable. This chapter provides what information there is on these producers and any of the larger truckmakers for which limited data is available.

AIOS (TURKEY)

The company was established in 1965 under the name Celik Montaj, to produce Skoda light trucks and Jawa motorcycles. The name was amended to Anadolu Otomotiv Sanayi Ve Ticaret AS in 1981.

Production of Isuzu trucks began, under license in 1984 and production of Skoda vehicles stopped in 1986, the year Isuzu and Itochu Corporation took a combined xx% stake. That stake was increased to xx% in 1996, the year the company’s name was changed to Anadolu Isuzu Otomotiv Sanayi Ve Ticaret AS. AIOS went public in 1997, leading to a dilution of Isuzu and Itochu’s shareholding.

Currently Isuzu holds xx% of the capital and Itochu xx.x%. Isuzu supplies kits of the N-Series and midi-buses for AIOS to assemble at its new plant at Sekerpinar, which opened in 2000. The factory has the capacity to produce x,xxx trucks per year on a single shift. It produces the NPR, NKR WIDE, NQR and NKR ranges. A bus plant on the same site has capacity for x,xxxupa.

In 2005 AIOS produced x,xxx trucks (2004: x,xxx) in the x.x-12t GVW range. This compares with output of 1,xxx trucks in 2003, x,xxx in 2002, xxx in 2001 (the year in which the Turkish economy underwent a severe recession) and x,xxx in 2000.

It also produced x,xxx pickups (2004: x,xxx, 2003: x,xxx, 2002: xxx; 2001: xxx;, 2000: x,xxx) and x,xxx midi-buses (x,xxx / x,xxx / x,xxx / xxx / x,xxx). At the end of 2004 the company employed xxx people, up from xxx a year earlier.

The company’s financial year ends on December 31st and in 2004 it made a net profit of €xx.xm on revenue of €xxx.xm. This compares with a 2003 net profit of €x.xm on revenue of €xxxm.

ASHOK LEYLAND (INDIA)

Ashok Leyland (AL) is xx% owned by LRLIH Ltd in which Iveco and India's Hinduja group have stakes of xx% and xx% respectively. Thus Iveco's stake in AL is normally quoted at xx%. The company is India's second largest truckmaker and employs over xx,xxx people.

AL used to produce an LCV, the Chital, but that ceased in 1996. It now concentrates on buses and medium to heavy trucks. AL is a leading player in India’s medium and heavy commercial vehicle segment with a dominant market share in the south. Nationwide its market share is around xx%.

The company used to produce Leyland models but these have now been replaced by production of Iveco's EuroCargo. The company has six plants, four of which (Ennore, Hosur 1 & 2 and Bhandara) carry out at least some truck assembly. Ennore is the largest plant, typically producing over xx% of AL's annual output. AL produces Hino and Toyota engines under licence.


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