Ashok Leyland drove north to win back market share

Ashok Leyland, the second-largest commercial vehicle (CV) manufacturer in the country, has finally managed to cut its dependence on the southern market and emerged as a player with a pan-India presence and recall.

The company, which had long confined itself to the southern region, today boasts of a bigger distribution network up north than down south, as per its 2011-12 annual report.

The company currently has over 420 full-service centres across the country. Of these, it has added nearly 80 outlets in the last couple of years, mainly in the north, west and central regions. Plans are afoot to add another 30 during this fiscal.

Ashok Leyland enjoyed a market share of 25.7% in fiscal 2011 in the medium and heavy duty commercial vehicle (M&HCV) segment, which slipped to almost 23% in the last fiscal.

The company managed to wrest back the share in the first five months of the current fiscal and looking at the product line-up it is set to grow further, experts feel.

“The recovery of the overall market share is attributable to a number of reasons with enhanced presence only being one of them. A better and deeper understanding of specific customer requirements, preferences and applications in the North has helped the company to manufacture and supply vehicles best-suited for these markets,” said Rajive Saharia, executive director – marketing, Ashok Leyland. 

After gaining traction in the northern market-- a turf of market leader Tata Motors-- Ashok Leyland is looking to entrench its position by offering products suitable for needs of the norther part of India.

It is going aggressive on marketing and pumping lot of money and efforts. It has signed Indian cricket skipper MS Dhoni as brand ambassador.

And driving this change is the management team which includes managing director Vinod Dasari and V Sumantran non-executive vice chairman of Ashok Leyland who also oversees the LCVs business, defence and the other joint ventures.

Its 50:50 joint venture with John Deere Construction & Forestry Co, US, has also helped in expanding product range. The venture launched its first product, the 435 backhoe loader in November 2011 and sold 221 units in the last fiscal.

“Ashok Leyland now has an entire range of products with a completely fresh business strategy, which has worked in favour of the company,” said an analyst with domestic brokerage.

However, the dip in the market share last fiscal was due to the southern region.

“The South market has traditionally been Ashok Leyland’s stronghold and will continue to do so. The underperformance of the South markets was attributable to some specific reasons – socio-political in nature – which have now been largely resolved and now the market is rebounding,” said Saharia.

Despite a drop in sales in the M&HCV segment by 12% (as per Society of Indian Automobile Manufacturers) during the current fiscal, a lot of new players such as Daimler India and Mahindra Navistar have already entered the domestic market with ambitious plans.