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The Landi Renzo group: a world leader in alternative fuel systems
Founded slightly over fifty years ago, the Landi Renzo group specialises in the design, production and retailing of automotive methane and LPG fuel systems. It is world leader in its segment with a market share of 23% and supplies over 50 car manufacturers. Founded by the entrepreneur that gave its name, today the company is directed by Stefano Landi, the son of the original owner who has strived to retain a competitive position on the international markets. At its inception the company was founded to cater for the demand for fuel systems for methane engines, which in Italy spread during the Second world war in response to petrol shortages. Today the Landi Renzo group aims to establish its reputation as a company tackling the challenge of sustainable mobility. We ask therefore Mr Landi to what extent the increase in oil prices can contribute to the long term development of his firm.
You are perhaps the only ones who can smile as oil prices reach record levels, going to break the 100 dollars per barrel target. Do you benefit indirectly from the price increase of the raw material used for traditional fuels (petrol and diesel)?
Current conditions allow us to foresee a significant development of the eco-mobility sector. And I am not simply referring to high petrol prices: it is the ever increasing focus on the protection of the environment that places our business in a strategic position. LPG and methane fuel systems non only cut particulate and CO2 emissions, but are also increasingly popular among consumers: over 3 million systems of this kind were sold in 2006.
The outlook, as you have just confirmed, is global and not only national. How does the Landi Renzo group, that has always had a strong exporting orientation, manage to stay competitive on the international front?
We are used to measuring ourselves against foreign competitors and clients as we have been exporting since the Sixties: we were a newly-founded company and we were already matching the demand for non-traditional fuel systems that was starting to emerge in the Netherlands and Japan, the first two destinations for our products. We then expanded our activities and today we are present in over 50 countries, and exports account for 74% of our earnings, which were worth nearly 139 million euros in 2006.
After 40 years from your first forays abroad, how has your approach to export markets evolved?
We were ‘pioneers’ once, entering new markets with a degree of recklessness, sometimes without even knowing the local language very well. Today, globalisation has facilitated processes, but has also intensified competition. There are no longer ‘rent’ positions to be exploited: it not enough to be the first to break into a new market because the competition is quick and ready to take away your position. The priority can only be one: defending market shares.
In detail, the Landi Renzo group fulfils this task in two ways: outsourcing production in some cases, and only opening local retailing subsidiaries. What are the reasons behind each approach?
While in Poland, the Netherlands and China our offices deal with distribution and after-sales care, in Brazil, Pakistan and Iran we have manufacturing plants that supply the demand in their respective reference markets, in South America and South-east Asia. As of 31st December 2006, however, the biggest share of exports was still absorbed by Europe (over 50%), confirming the usefulness of having two commercial subsidiaries in Europe. South-east Asia accounted for a 34% share of exports, South America for 6.5% and the rest of Asia for 5.5%.
You did not mention North America. Are US drivers not interested in alternative fuel systems?
In the US there as never been a developed market for private consumers, even though LPG and methane are quite common among industrial vehicles, especially for goods moving machines and fleet vehicles. Moreover, our strongest competitor, with a global share of 17% is from the US and is listed on Nasdaq. I do not deny that breaking into the US market is hard, but we are looking with particular attention to potential business developments in the area. There is growing awareness for the need to save energy and protect the environment, as the large investments made on bio-fuels and other alternative energy sources testify.