The country’s second-largest commercial vehicle (CV) manufacturer, Ashok leyland (ALL), has decided to discontinue its multi-purpose vehicle Stile due to poor demand. The MPV was being handled through a joint venture, with Japanese automaker Nissan manufacturing the vehicle and ALL retailing it.
The Stile sold a mere 10 units in March compared to 38 in the same month last year. In FY15 Ashok Leyland managed to sell only 346 units, compared to 776 in FY14.
Another offering from the joint venture, Evalia, an MPV sold by Nissan, will meet the same fate, with the company selling only 466 units in FY15. In March, Nissan managed to sell only 79 units of the Evalia.
Ashok Leyland has decided to write off Rs 200-214 crore, which was invested in the two platforms.
Vinod Dasari, managing director, Ashok Leyland, had recently said at the post-earnings analyst call that when the vehicle’s performance was significantly lower than planned, the company thought of taking an impairment.
“There are models that perform, there are models that don’t. In such events, the good thing to do is not to keep dragging it — the good thing is to take a provision for it, which is what we have done,” explained Dasari.
The joint venture, which started in 2008, will continue to produce light CVs such as the Dost, Partner and Mitr.
Analysts say it was a conscious decision by the Hinduja group-owned company as it is very difficult to make inroads into the highly competitive utility vehicle market.
“Ashok Leyland wants to focus more on the CV business as their demand is likely to increase with the expected pick-up in the manufacturing and mining sectors. As a Cv brand it will be very tough to make a mark in the passenger vehicle market”, said Amit Kaushik, principal analyst, IHS automotive.