Iveco to Accept Bonds as Guarantee Against Financing, Leasing

By Gilles Castonguay

MILAN--Iveco is offering to accept government bonds from customers as a guarantee against the financing or leasing contracts that they get from the Italian truck maker for the purchase of new vehicles, the latest measure deployed by Iveco to adjust to a crisis that has weakened demand for trucks across Europe.

"The project will have government bonds act as a guarantee for a valid loan for the purchase of Iveco industrial or commercial vehicles or for the drafting of leasing contracts," Iveco said Friday. "It's an operation that coincides with the aim of...offering customers more possibilities to access credit, so that they will be able to face this particularly difficult moment."

In a year in which Italy's economy is expected to shrink by more than 2%, small- and medium-sized businesses are having greater difficulty in getting financing as banks impose more stringent requirements for loans.

A division of Fiat Industrial SpA (FI.MI), Iveco is the fifth-biggest truck maker by market share in Europe's medium and heavy segments, according to IHS Global Insight.

Iveco's offer comes about a month after it announced it was willing to accept as downpayment for the purchase of its trucks any credit that its customers had outstanding with the Italian government. These credits are estimated to total billions of euros for the goods and services provided to the public sector.

In the first quarter, its sales in western Europe, a region that accounts for more than half of its total sales, fell 26.1% on the year, mostly due to poor performances in Italy and Spain.

In a recent report, Barclays said it expected volumes in the heavy truck segment to contract by 12% in Europe this year.

Fiat Industrial reports second-quarter results on Aug. 1.

Write to Gilles Castonguay at [e-mail]

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