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About CNH Industrial N.V.
CNH Industrial N.V. (CNH Industrial) operates as an equipment and services company.
The company engages in the design, production, marketing, sale, and financing of agricultural and construction equipment. It has industrial and financial services companies located in 32 countries and a commercial presence in approximately 170 countries.
The company’s geographic regions are North America; Europe, the Middle East and Africa; South America; and the Asia Pacific. The geographic designations have the following meanings: North America: the United States, Canada and Mexico; Europe, the Middle East, and Africa: member countries of the European Union, European Free Trade Association, the United Kingdom, Ukraine and Balkans, Russia, Turkey, Uzbekistan, Pakistan, the African continent and the Middle East; South America: Central and South America, and the Caribbean Islands; and the Asia Pacific: Continental Asia (including the India subcontinent), Indonesia, and Oceania.
Segments
The company operates through three segments: Agriculture, Construction, and Financial Services.
Agriculture
Agriculture designs, manufactures, and distributes a full line of farm machinery and implements, including two-wheel and four-wheel drive tractors, crawler tractors, combines, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements, and material handling equipment. Agricultural equipment is sold under the New Holland Agriculture and Case IH brands. Regionally focused brands include: STEYR, for agricultural tractors; Flexi-Coil specializing in tillage and seeding systems; Miller manufacturing application equipment; Kongskilde providing tillage, seeding and hay & forage implements. Further, starting in December 2021, Raven was included in the Agriculture segment bringing a leader in digital agriculture, precision technology and the development of autonomous systems to CNH Industrial.
Construction
Construction designs, manufactures and distributes a full line of construction equipment including excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders, and compact track loaders. Construction equipment is sold under the CASE Construction Equipment, New Holland Construction and Eurocomach brands.
Financial Services
Financial Services offers retail note and lease financing to end-use customers for the purchase of new and used agricultural and construction equipment and components sold through CNH Industrial brands' dealer network, as well as revolving charge account financing and other financial services. Financial Services also provides wholesale financing to CNH Industrial brand dealers and distributors. Further, Financial Services provides trade receivables factoring to CNH Industrial companies. The European operations of CNH Industrial Financial Services are supported by the Iveco Group's Financial Services segment. CNH Industrial Financial Services provides financial services to Iveco Group (Iveco Group N.V.) companies in the North America, South America, and the Asia Pacific regions.
Products and Markets
Agriculture
To capitalize on customer loyalty to its dealers and its brands, Agriculture’s product lines are sold primarily under the Case IH and New Holland Agriculture brands, as well as the STEYR and Kongskilde brands in Europe and the Miller and Flexi-Coil brands, primarily in North America and Australia. Raven primarily operates in North America, Australia, South America, and Europe. Certain agricultural equipment products are also sold under Överum (a sub-brand of Kongskilde), K-Line and JF brands. These brands enjoy high levels of brand identification and loyalty among both customers and dealers.
Distinctive features that are specific to a particular brand, such as the Supersteer tractor axle or Twin Rotor combine threshing technology for New Holland, the Case IH tracked four-wheel drive tractor, Quadtrac, and the front axle mounted hitch for STEYR tractors are examples of certain distinctive features that remain an important part of each brand’s unique identity.
Agriculture’s product lines include tractors, combine harvesters, hay and forage equipment, seeding and planting equipment, and self-propelled sprayers. The company’s agricultural equipment is sold with a limited warranty that typically runs from one to three years.
Case IH and New Holland Agriculture brands enable their customers to visualize and share in-depth real-time machine and farm operation data within the respective AFS-PLM Farm solution and offer data sharing to a vast number of third party providers at full control of the customer. Agriculture launched AGXTENDTM, focused exclusively on aftermarket precision farming technology solutions. AGXTEND is designed to provide the company’s dealers and customers access to innovative and more sustainable productivity enhancing precision farming technologies.
CNH Industrial acquired AgDNA an industry leading Farm Management Information System (FMIS) that automatically collects and analyzes data from equipment manufactured by CNH Industrial and third-party manufacturers. The cloud-based platform analyzes equipment, agronomic and environmental data to deliver actionable insights directly to customers' smartphones and tablets to help them maximize the agronomic performance of their CNH Industrial and other equipment to increase farm profitability.
Raven Industries, Inc. (‘Raven’) was acquired in order to expand the company’s portfolio of precision agriculture technology offerings and to accelerate the development of advanced machine automation and autonomous agriculture technology.
With Raven as part of the Agriculture product portfolio, the company designs, manufactures, sells, and services precision agriculture products, autonomous solutions, and information management tools, which are collectively referred to as precision agriculture equipment. The company’s Precision Agriculture suite of solutions encompass connected platforms, automation solutions and autonomous capabilities. The company’s technology stack includes satellite guided positioning, telemetric connectivity, automation software, ruggedized sensors and cross validation/machine learning aided by edge and cloud computing. The company’s connected platforms link farmers to their equipment, dealers, input providers, partners and other advisors enabling real time monitoring of their operations and logistics management capabilities. The company’s Raven brand offers retrofit solutions to upgrade farmer's existing equipment, resulting in increased productivity and reduced cost across the full fleet of equipment.
Construction
Construction’s product lines are sold primarily under the CASE Construction Equipment and New Holland Construction brands. CASE provides a wide range of products on a global scale, including crawler excavators and mini-excavators. The New Holland Construction brand family also markets a full product line of construction equipment in South America and focuses on light equipment distributed by the Agriculture network in the other regions. In 2021, the company completed the acquisition of Sampierana S.p.A., which provides Construction direct control over technology and manufacturing of Mini and Midi Excavators.
Construction's products often share common components to achieve economies of scale in manufacturing, purchasing, and development. Construction differentiates these products based on the relative product value, technology, design concept, productivity, product serviceability, color, and styling to preserve the unique identity of each brand.
Heavy construction equipment product lines include general construction equipment, such as large excavators and wheel loaders, and road building and site preparation equipment, such as compactors, graders and dozers. Light construction equipment is also known as compact and service equipment, and its product lines include backhoe loaders, skid steer and tracked loaders, mini- and midi-excavators, and compact wheel loaders. The brands each offer parts and support services for all of their product lines. The company’s construction equipment is generally sold with a limited warranty that typically runs from one to two years.
The company continues to evaluate its Construction business with a view toward increasing efficiencies and profitability, as well as evaluating its strategic alliances to improve its position in key markets.
Sales and Distribution
Agriculture and Construction
Agriculture sells and distributes products through dealers that sell either Case IH products, New Holland products or both brands. Case IH has 898 dealers worldwide with more than 2,500 point of sale locations and New Holland has more than 1,800 dealers worldwide and more than 3,700 point of sale locations. Construction sells and distributes products through approximately 420 full-line dealers and distributors with over 1,580 points of sale. Agriculture’s and Construction’s dealers are almost all independently owned and operated. Some Agriculture dealers also sell construction equipment. In the United States, Canada, Mexico, most of Western Europe, Brazil, Argentina, India, China, Thailand, Australia, and South Africa products are generally distributed directly through the independent dealer network. In the rest of the world, products are either sold to independent distributors who then resell to dealers, or to importers who have their own branches to sell product to retail customers.
The company often provides marketing assistance to its dealers to support the sale of used, trade-in equipment through subsidized financing incentives, inventory carrying cost defrayment, or other methods.
The company works to enhance its dealer network through the expansion of the company’s product lines and customer services, including enhanced financial services offerings, and an increased focus on dealer support. To assist dealers in building rewarding relationships with their customers, focused customer satisfaction programs have been introduced and they are expected to incorporate customer input into the relevant product development and service delivery processes.
As the equipment rental business becomes a more significant factor in both the agricultural and construction equipment markets, Agriculture and Construction are facilitating sales of equipment to the local, regional and national rental companies through their dealers, as well as by encouraging dealers to develop their own rental activities.
Agriculture and Construction have launched several programs to support their dealer service and rental operations, including training, improved dealer standards, financing, and advertising. As the rental market is a capital-intensive sector and sensitive to cyclical variations, the company expands such activities gradually, with special attention to managing the resale of rental units into the used equipment market by the company’s dealers, who can utilize this opportunity to improve their customer base and generate additional parts and service business.
The company is generally more cost-effective to distribute its agricultural and construction equipment products through independent dealers, although as of December 31, 2022, the company operated two Agriculture and Construction dealerships in North America and six company-owned Agriculture and Construction dealerships in Europe. The company also operates with a network of owned dealers for Case IH and the Construction segment in South Africa. The company promotes a selective dealer development program, in territories with growth potential but underdeveloped representation by the company’s agricultural and construction equipment brands, the program typically involves a transfer of ownership to a qualified operator through a buy-out or private investment after a few years.
Precision Agriculture technology is offered factory fit with the company’s new equipment, as well as offered as parts and service for retrofit solutions through the company’s dealer network. The Raven brand is leveraging and expanding their sales through the CNH Industrial dealer network in all the regions but is also distributing through independent dealers and directly to other OEM as factory fit solutions or their parts and service offering.
Parts and Services
The company supplies parts, many of which are proprietary, to support items in the current product line, as well as for products the company has sold in the past. The company also offers personalized aftersales customer assistance programs that provide a wide range of modular and flexible maintenance and repair contracts, as well as warranty extension services, to meet a variety of customers’ needs and to support the equipment’s value over time. Many of the company’s products can have economically productive lives of up to 20 years when properly maintained, and each unit has the potential to produce a long-term parts and services revenue stream for the company and its dealers. The technology has allowed the company to connect machines with its cloud-based Control Rooms and the company’s dealer service shops get results of analytics blended with the professional knowledge of the company’s products experts. The company is increasing the number of connected units supported proactively by Dealer Control Room that leverage service alarms, operators’ insights, predictive repairs and maintenance that enrich a suite of machine and farm data’s.
As of December 31, 2022, the company operated and administered 34 parts depots worldwide, which support both Agriculture and Construction, either directly, through a joint venture, or through arrangements with warehouse service providers. This network includes 10 parts depots in North America, 7 in Europe, 3 in South America, and 14 in other regions. The network includes 33 parts depots that support Agriculture and 30 that support Construction. These depots supply parts to dealers and distributors, which are responsible for sales to retail customers. The company’s parts depots and parts delivery systems provide customers with access to substantially all the parts required to support the company’s products.
Research and Development (R&D) Expenses
In 2022, the company’s R&D expenses were $866 million.
Patents and Licenses
Agriculture—The company is marketing the New Holland, Case IH, STEYR, Raven and Miller brands and logos as the primary brand names for the company’s agriculture products.
Construction—For construction equipment under New Holland, the company is marketing the New Holland Construction brand name and trademark. For construction equipment under CASE, the company is promoting the CASE Construction brand name and trademark.
Joint Ventures
As part of a strategy to enter and expand in new markets, the company is also involved in several commercial and/or manufacturing joint ventures. As of December 31, 2022, they included the following:
In Japan, the company owns 50.0% of New Holland HFT Japan Inc. (‘HFT’), which distributes the company’s products in Japan. HFT imports and sells the full range of New Holland agricultural equipment;
In Pakistan, the company owns 43.2% of Al Ghazi Tractors Ltd., which manufactures and distributes New Holland tractors;
In Turkey, the company owns 37.5% of TürkTraktör ve Ziraat Makineleri A.S., which manufactures and distributes various models of both New Holland and Case IH tractors;
In Mexico, the company owns 50.0% of CNH de Mexico S.A. de C.V., which manufactures New Holland agricultural equipment and distributes the company’s agricultural equipment through one or more of its wholly-owned subsidiaries.
Financial Services
Financial Services offers a range of financial products and services to dealers and customers in the various regions in which it operates. Retail financing products primarily include retail notes, finance leases and operating leases to end use customers and revolving charge account financing to purchase parts, service, rentals, implements and attachments from CNH Industrial brand dealers. Wholesale financing consists primarily of dealer floorplan financing, as well as the management and purchase of trade receivables from CNH Industrial companies. Dealer floorplan financing gives dealers the ability to maintain a representative inventory of products. In addition, Financial Services provides financing to dealers for used equipment and machines taken in trade, equipment utilized in dealer-owned rental yards, parts inventory, working capital and other financing needs. As a captive finance business, Financial Services is reliant on and supports the operations of Agriculture, Construction, their dealers, and customers.
Financial Services supports the growth of Industrial Activities by developing and structuring financial products with the objective of supporting equipment and parts sales, as well as customer loyalty. Financial Services’ strategy is to grow a core financing business to support the sale of the company’s equipment and parts while at the same time maintaining its portfolio credit quality, service levels, operational effectiveness and customer satisfaction. Financial Services also offers products to finance third party equipment and machines sold through the company’s dealer network or within the company’s core businesses. Financed third party equipment include used equipment taken in trade by the company’s dealers or equipment used in conjunction with or attached to the company’s products.
In North America, retail customer and dealer financing activities, which support the sales of Agriculture and Construction, are managed through the company’s wholly-owned financial services companies.
In Europe, the Middle East and Africa, CNH Industrial Capital Europe S.a.S., which is 24.95% owned by CNH Industrial and accounted for under the equity method, provides retail financing to customers of Agriculture and Construction. Additionally, there are vendor programs with banking partners that provide customer financing to the company’s industrial segments in certain countries.
In Europe, IC Financial Services S.A., a French specialized credit institution, wholly-owned by Iveco Group, manages CNH Industrial dealer financing through a dedicated securitization. CNH Industrial Capital Solutions S.p.A. retains the securitization program's junior notes, and therefore retains substantially all the risks and the benefits of the underlying wholesale receivables.
For South America, retail customer and dealer financing activities are managed through the company’s wholly-owned financial services company, which support the sales of Agriculture and Construction. For retail customer financing in Brazil, Banco CNH Industrial Capital S.A. serves as a lender for funding provided by BNDES, a federally-owned financial institution linked to the Brazilian Ministry of Development, Industry and Foreign Trade. In Argentina, vendor programs with banking partners are also utilized. CNH Industrial Financial Services serves as a lender for Iveco Group and services the sales of Iveco Group.
In the Asia Pacific, CNH Industrial Financial Services supports the sales of Agriculture and Construction by providing retail customer and dealer financing activities in Australia, New Zealand and India, managed through wholly-owned financial services companies. In China, Agriculture dealer financing activities are provided by and managed through a wholly-owned financial services company. CNH Industrial Financial Services serves as a lender for Iveco Group and services the sale of Iveco Group in Australia and New Zealand.
Customer Financing
Financial Services has certain retail underwriting and portfolio management policies and procedures that are specific to Agriculture or Construction. This distinction allows Financial Services to reduce risk by deploying industry-specific expertise in each of these businesses. The company provides retail financial products primarily through the company’s dealers, who are trained in the use of the various financial products. Dedicated credit analysis teams perform retail credit underwriting. The terms for financing equipment retail sales typically provide for retention of a security interest in the equipment financed.
Dealer Financing
Financial Services provides dealer floorplan financing, and to a lesser extent, the financing of dealer operations. Under the standard terms of the wholesale receivable agreements, these receivables typically have a fixed period of ‘interest-free’ financing to dealers.
Factoring
Financial Services also provides intragroup factoring of trade and other receivables. This activity involves the purchase, without recourse, of receivables of CNH Industrial companies, originating from the Industrial Activities segments, and due from third or related parties.
Sources of Funding
Financial Services funds its operations and lending activity through a combination of term receivable securitizations, committed secured and unsecured facilities, uncommitted lines of credit, unsecured bonds, unsecured commercial paper, affiliated financing, and retained earnings. Financial Services’ funding strategy is to maintain sufficient liquidity and flexible access to a wide variety of financial instruments and funding options.
Financial Services has periodically accessed the asset-backed securities (‘ABS’) markets in the United States, Canada, and Australia, as part of its retail note and wholesale financing programs when those markets offer funding opportunities on competitive terms. Financial Services has also accessed the unsecured bond market in the United States, Canada, Brazil, Argentina and Australia; and commercial paper markets in the United States to diversify its funding sources.
Environmental and Other Regulatory Matters
The company’s operations globally are also subject to risks of violations of laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as a range of national anti-corruption and antitrust or competition laws that apply to conduct in a particular jurisdiction.
Competition
The company’s main competitors in the agricultural equipment market are Deere & Company, AGCO Corporation, Claas Group, Kubota Tractor Corporation, Argo Tractors S.p.A., and the Same Deutz Fahr Group.
The company’s principal competitors in the construction equipment market are Caterpillar Inc., Komatsu Ltd., J C Bamford Excavators Ltd., Hitachi Construction Machinery Co, Ltd., Volvo Group, Liebherr Group, Doosan Group, Kubota Tractor Corporation, and Deere & Company.
History
CNH Industrial N.V. was founded in 1842. The company was incorporated in 2012 as a public limited liability company (naamloze vennootschap) under the laws of the Netherlands.
