24/7/2024 |Articles are machine translated
David Kříž, CEO of Iveco Czech Republic. | Photo: AutoSAP
Although the General Manager of Iveco Czech Republic, David Kříž, has a driving licence only for passenger cars, he was happy to sit behind the wheel of a bus with the IVECO BUS brand at our request. He is proud of this brand, especially the CROSSWAY model series, which is produced – in many variants and with various drives including batteries – in Vysoké Mýto on a single line. This does not at all prevent this model from being the number one in its category on the European market. David Kříž explains why in an interview.
Not so long ago, in a media interview, you said: “We are not afraid of anything. We are not afraid of European regulations or Chinese technology.” That sounds sympathetic, courageous. It’s certainly good that you’re not afraid, but you’ll probably admit that both are a big challenge.
This is undoubtedly a challenge for all car, truck and bus manufacturers. But the statement you quote was made in the context of what IVECO BUS (which is a brand of the Iveco Group, the parent company of Iveco Czech Republic – ed.) actually does. We are a so-called full liner, which means that we offer all kinds of vehicles for all kinds of missions that customers need or expect. We have city buses, intercity buses and long-distance buses. We have all kinds of propulsion that today’s technology makes possible: diesel, gas, biomethane, hydrovegetative oils, paraffin diesel… We have hybrid, electric and hydrogen buses.
So let’s break it down. Let’s start with the current one, European regulation, specifically the Euro 7 standard. While the conditions for passenger vehicles have been relaxed, the standard is more stringent for buses and trucks. No problem?
The resulting Euro 7 standard is of course demanding, more stringent for buses than for cars and light commercial vehicles. NOx emissions must be reduced by around 55 percent compared to the Euro 6 standard. Particulate matter will be measured for those larger than 10 nanometres – up from the previous size of 23 nanometres. In addition, the standard addresses requirements for total vehicle lifetime emissions, battery durability, limits on battery wear and other new requirements that were not in the previous standard.
However, we believe that the standard is technologically feasible. It will require investment in some new technologies. What is positive is that the timeframe has been extended. For buses and trucks, the Euro 7 standard should come into force in the first half of 2028 for new vehicle types and in the first half of 2029 for existing types. In the original proposal, the time was very short.
Do the same limits apply to everything for urban, intercity and long-distance buses? Is everything clear?
Of course, you can’t say that. City buses are a specific category. There, the Euro 7 standard assumed that if the new CO2 regulation for trucks and buses made it mandatory to register only zero emission city buses from 2030, then the Euro 7 standard would not apply to these types of buses at all until 31 December 2029. This is probably not going to happen after all, because the current CO2 regulation proposals envisage not a 100%, but a 90% commitment for the registration of zero CO2 city buses by 2030.
The big unknown also remains the implementing acts, which have yet to be drafted by experts from EU Member States. It is expected that a whole package of secondary legislation will be drafted in the coming years to accompany the Euro 7 standard, which is already several thousand pages long, and which must resolve or clarify existing ambiguities.
You said that meeting the standard would mean investing in new technologies. How much will that increase the price, especially for buses with internal combustion engines?
Of course, any new technology that requires investment has to be reflected in the final price in some way. However, it should be added that some of this will fall on the shoulders of the suppliers rather than the final manufacturers, who will also have to invest in new technologies such as tyre and brake emission capture technology.
You export to many countries around the world, are there going to be similarly strict conditions somewhere?
We export primarily to Europe, where the same rules apply. As far as Africa is concerned, for example, you can sell Euro 3, Euro 4 buses there today.
Behind the wheel of the versatile Evadys, which is designed for regional and national routes, airport transportation, organized tours and excursions. | Photo: AutoSAP
Do you still make those?
We can produce them as a special order.
Do you think that in the next few years there will be a reassessment of the regulations imposed on the automotive sector or a shift in the timing of the targets? And would you like that?
Every regulation is a law made by a legislator, and that legislator can change it in turn. Anything can happen, it’s still just a social convention, not a physical law. In my opinion, nothing will change about the overall policy of fighting to reduce emissions. But how we get to the target may lead down different paths, even different from the way the legislators currently set them.
As you know, the future is already here for the passenger transport sector. By 2030, zero-emission vehicles will make up 90 percent of newly registered European urban buses – in just six years! Such a rapid shift will be the result of a concerted effort. Governments, carriers, OEMs and infrastructure providers, we all need to work together. This requires a deep understanding of regulations, regional differences and local needs. The path is not the same for everyone.
I think a certain mix will prevail, certainly internal combustion engines will still be in play, and only in the longer term will it become clear which of the alternatives will make economic sense.
As you said, IVECO BUS maintains a wide range of powertrains and you probably don’t even have a date set for when you will produce the last bus with an internal combustion engine. So don’t worry because you are ready for anything.
Yes, we are basically ready for anything. This is how the bus business has developed organically over the last fifteen or twenty years. Bus manufacturing has been such a laboratory for alternative propulsion. We were the first to introduce CNG, bioCNG, various other fuels with some biocomponents and so on. We believe in a sensible energy mix and we have adapted our product strategy to that.
Do all the drives also apply to Iveco in Vysoké Mýto, or are different variants produced in different countries?
The production of models is clearly divided. In Vysoké Mýto, the CROSSWAY model series is produced, which are intercity buses including the tourist EVADYS. The individual models are CROSSWAY Pro, CROSSWAYLine, CROSSWAY Low Entry City, CROSSWAY Low Entry LineCROSSWAYPop. CROSSWAY Low Entry Line had the highest production share, 38 percent, in 2023.
URBANWAY city buses are made in Annonay, France, E-WAY models are made in Rorthais, France, and minibuses are made in Suzzara, Italy.
As for the drives, these go across the model lines. So, yes, we make CROSSWAY buses with all of these types of drives.
Do you sense a growing interest in electric buses?
Generally speaking, we see different dynamics for buses, which is reflected, among other things, by emissions regulation. While the trend towards zero-emission buses is unquestionable for urban buses, for intercity buses the customer appetite towards battery or hydrogen buses is more motivated by potential subsidies. Tourist buses do not yet have an economically sensible technological solution in the field of electric mobility.
But last year you introduced the new CROSSWAY Low Entry Elec electric commuter bus. What is its range, how does it charge and how long does it take to charge?
That depends on many factors – battery capacity, the type of line the electric bus operates, temperature conditions. The largest possible battery capacity offers a range of 350 to 400 kilometres. Charging is handled on CROSSWAY vehicles via the CCS Combo2 charging socket or, if required by the customer, via a charging interface on the roof of the vehicle, either in the form of a rising pantograph or charging rails. As for the length of the charging period, this again depends on the number of batteries in the car, the depth of discharge of the batteries and the voltage of the grid. Charging the batteries from 20 percent to 100 percent at 100 kW takes about three hours.
What is the price difference between a conventional diesel and a battery-powered suburban bus?
The price of the electric bus itself is not a relevant figure, you have to take into account all the parameters around the vehicle: service, maintenance, consumption, ease of electric motorisation, etc. What matters to our customers is the total cost of ownership – TCO over the lifetime of the vehicle.
You have won various awards for your models, one last year for the CROSSWAY Low Entry Gas Hybrid, which runs on biomethane.
Yes, we also produce the bus as a mild hybrid, which can be both with conventional diesel and gas power, so it also runs on biomethane.
How many people want to run on biomethane?
There are countries that have a strong agricultural sector, and many companies there have biomethane as a residual product. These companies then offer it to their customers as a fuel, with some countries being able to subsidise their vehicles with this fuel. These are countries like France, Benelux and so on. These are the countries that are interested in biomethane buses.
But I would say that the flagship deal is FlixBus, which is running our CROSSWAY biomethane bus on the regular Brussels-Amsterdam route.
Another example is the city of Mladá Boleslav, which produces its own biomethane from municipal waste and then uses it to power its public transport buses. This is a beautiful example of the circular economy.
As of 31 December 2023, there were around 150 M3 battery electric buses in operation in the Czech Republic. Do you consider this to be a good result?
The whole Central European area is rather more conservative when it comes to electric mobility, which is not only evident in buses. Compared to Western Europe, of course, it is less so.
The buses from Vysoké Mýto are far from running only in Europe. Last year, you exported more than 90 percent of the vehicles you produced to a total of 25 countries. Where does most of the production go?
We export mainly to European countries, the biggest markets are Italy, France and Slovakia. Some exports go to Asia and Africa, specifically to Senegal and the Ivory Coast. But CROSSWAY also operates in Siberia or New Caledonia. So this bus is proven in all climate zones. It is a “workhorse” that is as capable of operating beyond the Arctic Circle as it is in tropical regions.
What is your overall position in the European market?
IVECO branded buses had a market share of more than 22% last year, making us the number two in Europe. In the segment of intercity buses, which we make in Vysoké Mýto, we are number one, with CROSSWAY gaining a 50 percent market share.
Vysoké Mýto also holds the title of the largest bus manufacturing plant in Europe. This puts the Czech Republic in the position of the largest bus manufacturer on the European continent – in terms of production volume, we have overtaken Poland and Sweden for the first time in 2022.
Currently, David Kříž is the CEO of Iveco Czech Republic and the General Counsel of the Business Unit Truck in the Iveco Group with a global presence. | Photo: AutoSAP
What is your proudest recent commission?
I would probably mention the 380 CROSSWAY buses to Senegal. But overall, we’re proud of the fact that we win on quality, on performance and on operating costs for the customer – that is, how much the customer buys the bus for, how much it consumes, what the maintenance costs are, what the service costs are, and then how much they still sell it for after ten years of use. CROSSWAY has built the best reputation based on positive experiences.
What is the position of buses on the Czech market?
We are the market leader in the Czech Republic with a market share of 36 percent.
How long does it take to process a customer request before you deliver the product? So how long does it take on average to produce one bus?
Four to eight months, depending on the model, complexity and level of specific customer requirements.
What would you say is the “top” thing a customer can want in a bus today in terms of technology?
Buses today have virtually the same technology as passenger cars. A customer who wants the top “package” of connectivity then has a lot of useful information available online, not only about consumption, but also about driving style or predictive maintenance, for example. Of course, newer and newer passive and active safety features are also being added all the time. A bus can be equipped with cameras all around its perimeter.
How do you see the future of Level 4 autonomous driving in public transport vehicles?
In the medium term, I see autonomous driving as a realistic use, for example, in closed areas of transport companies or regional carriers, where it can be used for internal logistics or parking. Anything more ambitious is unlikely to happen before the end of this decade.
I’ve noticed that when you supply a customer with an electric bus, you are able to supply it with a charging station or the whole ecosystem, including monitoring and energy supply. Can you say more about that?
A significant majority of our buses are sold on the basis of winning public tenders. The contracting authorities are typically city transport companies, regional carriers or long-distance carriers. Each of them has its own depot where the buses are parked when they are not on the routes. This is the ideal place and time to recharge the batteries of electric buses. It happens that a customer buys an electric bus for the first time, often with some subsidy for the project, and therefore wants to get everything complete – with a charging station and sometimes with an energy supplier. As the tender structure is more complex, public authorities and operators are looking for system integrators who are able to offer a fully comprehensive offer from study to dimensioning to delivery and installation and maintenance of the transport system. We have anticipated this new business trend and created an ecosystem of partnerships with key players.
Is this a frequent request?
Yes, it is a direct megatrend in our business. That’s why we created a special unit for this purpose, the Energy Mobility Solutions division, to support customers in transitioning their fleets to zero-emission operation. The division’s staff is able to prepare packages that provide complete, tailored solutions that include the design, installation and maintenance of the entire ecosystem of electric buses and charging infrastructure.
Last year, Iveco Czech Republic generated a profit after tax of almost CZK 1.6 billion, which was CZK 178 million more than in 2022, so clearly a successful year?
The year 2023 was again a challenging one, but despite the difficulties we faced in logistics and the interruption in the supply of parts, fortunately of a short-term nature, we managed to increase our profit. This positive result is the result of the measures taken and the negotiations held with our suppliers to improve our performance in a context of rising energy and raw material prices.
Profit increased, but the number of buses produced fell – 4,735 buses were produced, 32 fewer than the year before. Did you raise prices, sell more expensive models, or did you make more money from other services and from selling buses from your other plants?
The financial results of Iveco Czech Republic do not only include buses manufactured in Vysoké Mýto. Last year, we sold a total of 5,736 buses from IVEC0 BUS production, 22 percent more than the year before. We continue to sell IVECO trucks – here, too, there was a year-on-year increase of almost 16 percent, when we sold 2,986 of them. We also saw an increase in sales of spare parts and other goods, up 28 percent.
How does this year look like?
In terms of demand for our products, so far so positive. But of course, there is always uncertainty associated with the course of individual tenders. To explain: We have tendered for a number of orders in the past years and have framework agreements for several years, but then the customer still has to confirm everything and send a specific order. How he spreads it out over the years is up to him – and therein lies the uncertainty.
However, the portfolio of markets to which we export is so broad that we should not be adversely affected.
You said that you continue to face supply shortages, albeit short-term. What else will affect the second half of this year?
Generally speaking, the evergreens of the past few years – inflation, energy price increases and to some extent broken supply chains – have sort of settled down. But of course, no one knows when a problem will occur.
What about events in the Red Sea, where ships cannot safely pass because of pirate attacks? Does that concern you?
Of course, it affects everyone who uses that route. When a ship has to go all the way around Africa, it obviously makes transport more expensive. But as far as our business is concerned, we are not able to discern how much any delay in delivery has caused these problems.
David Kříž is also a member of the statutory and supervisory bodies of other Iveco Group companies and a member of the Board of Directors of the Association of the Automotive Industry. | Photo: AutoSAP
Going all the way back to the beginning: You said you’re not afraid of Chinese technology. So you don’t expect Chinese buses to take a chunk out of your market share in the near future?
I know it’s a hot topic in the passenger car segment.
But that doesn’t mean that nothing is happening in our segment. There’s a lot of movement here too.
Manufacturers are competing fiercely not only in Europe, but also in Africa, Central Asia, basically everywhere. But our strength is our unique service network and the long-standing relationships we have built with our customers.
Do you mean, for example, moving production? According to media reports, Scania, for example, a bus and truck manufacturer, has decided to close its bodywork factory in Poland and will use cooperation with bodybuilders. Van Hool is also facing problems and there is talk of closing coach production in Belgium and moving to Macedonia.
It has always been the case that someone left the market and someone else came back. It is true that manufacturers are looking for places with lower costs. Some have switched to supplying only chassis instead of complete products and body work is done in other countries outside the EU. Times are turbulent.
I assume that IVECO BUS is not going to do anything like that.
IVECO BUS is built on a global industrial presence, including Latin America and Turkey, plus a strong presence in Europe. Among our nine production plants around the world, there are two city bus plants in France, two minibus plants in Italy and in the Czech Republic, Vysoké Mýto is a centre of excellence for the production of CROSSWAY intercity buses.
The most significant recent investments in our production facilities include a new plant in Foggia, Italy, and the modernisation of the production line in Annonay, France, which includes the production of electric vehicles and battery assembly.
Back to the Chinese market, the European Commission is investigating whether Chinese car manufacturers are benefiting from illegal state aid. If it finds that they are, it intends to impose further duties on Chinese imports. What do you think?
That is a difficult question. Europe is to some extent dependent on supplies of various raw materials from the East, and we know that every action provokes a reaction.
Earlier this year, at the Capital Markets Day event, IVECO BUS management announced that it intends to continue to focus on “increasing the scale of the business and optimising operations to increase profitability”. Domenico Nucera, president of IVECO BUS, said the bus unit will invest about €600 million between 2024 and 2028 in the development and production of emission-free vehicles. Does this somehow also apply to Vysoké Mýto?
The 2028 targets announced at the beginning of the year are another milestone on our journey. And, of course, it concerns us because we have one of the IVECO BUS Group’s development centres here.
One part of it deals with developments in the field of intercity buses, both in the context of the requirements of European legislation and the transition to emission-free mobility. The second part relates to the fact that every bus we produce is essentially unique. Customers can order a large number of different options, sometimes even significant changes to the standard configuration. Then our designer has to figure out how to do it. So the development will definitely be strengthened.
What about investment in production? You still have a lot of people doing a lot of the work. Is that because it makes economic sense, or is it because these are activities that cannot be automated or robotized?
Step by step, we are robotizing and digitizing production, sometimes it’s easier, sometimes it’s more complicated. And of course, the more buses we produce, the more employees we need, so the more automation pays off. So we still have to do the math.
And one more important thing about investment. The investment cycles in the bus industry are much longer compared to those in passenger cars. A passenger car is produced for, say, four or five years, then production stops and the line is immediately converted to another model. We have only one line where all types of buses are produced. This means that there is a gas bus on the line, followed by an electric bus and then a hybrid.
And this is made possible by the fact that there is a significant amount of human labour.
Each bus is very much a specialised production. Each one is a little bit different; on average, two and a half to three of the same buses are produced per year. So it makes sense to have a mixed line. It’s a unique feature that sets us apart from other plants in the group.
According to the already quoted Domenico Nucera, by 2028 IVECO BUS wants to invest 300 million euros “in a modular architecture of electric origin that will integrate batteries into the vehicle design to reduce weight, increase passenger capacity and increase range.” This certainly applies to Vysoké Mýto as well, because they also produce electric buses here. When there is more demand for them, will there be a new line added in connection with this plan?
We will launch an electric architecture that integrates batteries into the vehicle design, but it will still be possible to produce a vehicle with a hydrogen drive or an internal combustion engine. So production will still take place on one line, but it will definitely be simpler.
How many people work at Iveco Czech Republic? Do you expect to hire new employees or reduce their number?
At the end of March 2024, our company employed more than 4,000 people, including agency workers. With regard to the planned production volumes, we do not expect any reduction in employment; on the contrary, the outlook is for a slight increase in the total number.
Is it true that the plant still employs a significant number of people from the original Karosa, which has been defunct for almost twenty years?
The average length of service of tribal employees is 19 years for THP positions and almost ten years for blue-collar jobs. We are proud of the low turnover of tribal employees. But to your question about Karosa: This year we are celebrating 129 years since the company was founded. Such a long history of production in one small town brings situations where we have, for example, the third or fourth generation of employees from one family.
Vysoké Mýto holds the title of the largest bus production plant in Europe. This puts the Czech Republic in the position of the largest bus manufacturer on the European continent. | Photo: AutoSAP
You are a member of the Board of Directors of AutoSAP, so you have an overview not only of bus production, but also of the overall condition of the Czech automotive industry. How would you characterize in simple terms that the sector is doing well this year?
I’m not a complete insider in the passenger vehicle manufacturing sector, and as I like to say, a bus is not just a blown-up car. The businesses are quite different.
The European car industry derived its strength from the perfect mastery of internal combustion engine technology. Without going into the individual causes and consequences, this strength is now slowly disappearing under the onslaught of the energy transition. In this context, it is probably not entirely relevant how the Czech or European car industry stands today or tomorrow, but how it will stand in five or ten years’ time. Regulations, which are widely discussed, are one thing, but the traditional rules such as customer demand and economic viability – price, if you like – remain another. Everything now seems to be in flux and in a fog.
As I said: regulation is, after all, just a social contract. And it can be changed by the legislator at any time if the will of his electoral base is there. Customers will only buy what they have the money to buy or what is user-friendly for them. And that involves public money in the form of subsidies, which each state sets differently.
At this point, I would go back to buses. Our society has come out of this fog in every available technological direction so that we are ready for the moment when it clears.
