Ashok Leyland, India’s second-largest commercial vehicle maker, which saw erosion in its market share in the past few quarters, is taking corrective measures to regain the lost ground by the year-end.
The company, which enjoyed a market share of around 26% in the CV space, lost 3-4% share in the last few quarters due to high competition and a lack of product mix.
Now, it is lining up new product launches and network expansion to claw back to 25% market share by the year-end.
Also, the company is expecting the situation in the southern region to stabilise and boost the company’s sales in that market. Its sales in South were affected due to elections in Tamil Nadu and the Telangana issue in Andhra Pradesh.
Ashok Leyland faced constraint on the body-building side during the last quarter due to which it lost some production. It is now planning to offer fully built solutions to reduce dependence on body-building manufacturers.
“We are increasing our sourcing capability on the body-building side. Initially, we will offer tippers as part of our fully built solution offerings,” K Sridharan, chief financial officer, Ashok Leyland, said on an earnings call.
The company is also positive on the sales outlook for the second half as it feels that factors such as overloading ban in different states will help in boosting sales for the overall CV industry.
“Currently, there is a ban on overloading of trucks in Uttar Pradesh. It is slowly being implemented in other states like Madhya Pradesh, Bihar and Karnataka. However, the effectiveness of the policy is still not up to the mark. We are seeing more demand for higher-powered and high-tonnage trucks,” he said. Ashok Leyland is gearing up to expand its network in the eastern and northern regions, where Tata Motors has a strong hold.
“We are increasing our penetration in North, South and Goa. We are also adding more service stations for better customer experience,” Sridharan said.
The company is also in the process of redefining its sales strategy as it plans to target fleet operators for bulk orders.
Ashok Leyland is also seeing traction on the defence segment and has an order of 400 units of fully built vehicles in hand. It is also bullish on its joint venture with Nissan for manufacturing light commercial vehicles (LCV).
“We are stepping up production on the LCV side. We are planning to manufacture around 12,000 vehicles during the second half of the current fiscal. The company has sold 210 units of Dost (LCV) so far,” he said.
The company sees 15% of its overall sales coming through exports. It has set a target to export 13,000 vehicles this year, with a strong focus on Latin America and African countries.
However, Ashok Leyland is concerned over rising interest rates and fuel prices, which threatens to shrink the overall CV industry growth.The company also expressed concern that freight rates were going down in Chennai and Kolkata, though they have risen in the northern and western regions.
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