Buoyed by an impressive 37% growth in its LCV business for the just-ended fiscal 2018, Ashok Leyland has decided to produce LCVs under a new platform to address the unaddressed tonnage categories in the domestic market.
Hinduja group flagship Ashok Leyland (ALL) is betting big on the LCV front. Buoyed by an impressive 37% growth in its LCV business for the just-ended fiscal 2018, the company has not only decided to produce LCVs under a new platform to address the unaddressed tonnage categories in the domestic market but also to increase its export volumes further. Anticipating a surge in demand for LCVs in the coming years due to GST, infra spending and last-mile connectivity, the company is ramping up production capacity at its Hosur plant to 100,000 units per annum against 50,000 units per annum now, said Nitin Seth, president for LCV, Ashok Leyland. “Under the new platform, the company is also developing products to tap the left-hand-driven markets globally (which throw huge opportunity). It will also develop an electric LCV under the new platform to keep itself ready to tap the domestic market as and when a dedicated EV policy is announced,” Seth said. “We are investing Rs 400 crore on a new platform and products development and will be spending another Rs 300 crore to ramp up the production capacity,” he replied to a specific question. In an exclusive interview with FE in Chennai on Wednesday to mark the rolling out of the 200,000th LCV since its entry into this segment in late 2011, Seth said: “We have proved the critics wrong with the stupendous success in our LCV business post buying out of our JV partner Nissan some months ago. Many even suggested we close down the LCV business due to issues with Nissan and later its exit from our JV, but ALL decided to move ahead. In fact, we have grown 37% to end with 43,441 units for the just-ended fiscal 2018…. Our monthly LCV sales crossed the 5,000 units mark over the last few months for the first time since our entry into this segment.” “We hope that the LCV industry will see 12% CAGR over the next two years — from 476,000 units in FY18 to 626,000 units by FY20; hence the company has decided to develop a new platform for products to address the entire LCV portfolio. We are currently present in the 2 to 3.5 tonnage and 6 to 7.5 tonnage categories, which cover 38% of the total LCV industry. With the products under the new platform, we will address the new tonnage categories that ALL had not addressed till date. The new areas will enable us to increase our coverage to 62% of the total LCV industry. We won’t be entering the below-2 tonnage category,” Seth further said. In India, LCVs’ share in the overall commercial vehicle industry has gone up from 58% in FY17 to 64% in FY18 and the same will increase to 70%, which is now prevalent in global markets, he said. “It is a cause of concern for us that the interest rates might go up as sign of this have already been seen. Though GST proved to be success for players like ALL, for the smaller parts maker it is considered to be dampener, hence we see some sort of hindrance in our growth,” Seth said.