Ashok Leyland has acquired 35% market share in the medium and heavy commercial vehicle (M&HCV) segment in July on the back of a strong demand, expansion of the dealership network in the north and east India and high discounts on vehicles.
This has perhaps been the best ever performance by the flagship company of the Hinduja group in terms of gaining market share in the M&HCV segment. Market share for the April to June quarter stood at 31% in the M&HCV segment.
“The product variants chosen by the company for launch in domestic and select export markets in last one year across the segments have improved market share in domestic market as well as increase in export sales. Ashok Leyland had also focused on improving the network on cost effective basis particularly in north, central and eastern regions,” said the company in its annual report.
In July, the Chennai based commercial vehicle manufacturer registered a 53% y-o-y increase to 8,803 units. Volumes for the April to June quarter increased by 44% y-o-y to 21,485 vehicles compared to 14,908 units in the year ago period.
“Ashok Leyland’s market share reached all time high driven by market share gains in the above 25 tonne truck (up 400 bps to 38%) and bus segment (up 200 bps to 38%). Overall, AL has outperformed the industry, driven by strength in the south Indian market coupled with market share gains in other relatively untapped regions,” said Axis Capital in one of its reports in the automobile sector. Enhanced volumes in northern and eastern India as result of the expansion in dealerships have helped the company increase its market share. In FY 15 the company opened 58 dealerships across the country and a substantial part of those are in north India.
Besides, the recovery in the MHCV sales due to the overall improvement in the economy, Ashok Leyland continues to give high discounts on its trucks and busses. In the first quarter the average discount on a Ashok Leyland manufactured truck or buss is Rs 2 lakh.
According to analysts, Ashok Leyland may further increase its market share in the M&HCV segment as truck fleet operators are expected to buy vehicles before the law which makes use of antilock braking system (ABS) mandatory. Manufacturing cost of vehicles armed with ABS will increase so truckers are expected to buy vehicles before the implementation.
“Ashok Leyland has been investing in getting the right product mix, distribution networks and after sales service in the last one year. the company gained from the higher reach in the south India. Offering huge discounts also helped but I think its is a short term measure,” said Abdul Majeed, partner, PriceWaterhouseCoopers . Increased volumes also improved the financials of the company in the first quarter. The net sales increased 55% y-o-y to Rs 3841.2 crore while the net profit for the quarter stood at Rs 1593 crore compared to loss of Rs 480 crore.