Ashok Leyland to invest Rs 400 crore in LCV push

NEW DELHI: Hinduja Group’s flagship truck maker Ashok LeylandNSE -1.33 % expects demand in the segment staying strong and growing by 10-12% in the current financial year boosted by public investments in infrastructural projects and companies that will benefit from the hub-and-spoke model to transport goods post GST.

To cash in on the spike in demand, India’s second largest manufacturer of medium and heavy commercial vehicles (MHCVs) has now outlined aggressive plans to increase market share in light commercial vehicles (LCV).

Ashok Leyland is looking at investing Rs 400 crore over the next couple of years towards the development of new LCV platforms to meet requirements under BS-VI emissions standards. Once new products start coming in post 2020, the company is aiming to double its market share to 30% from the current 16%.

“At present, our products address only 38% of the overall market for LCV. We are investing Rs 400 crore to develop new products aligned with BS-VI emission standards. This will enable us to cover 60-65% of the market. Results will start reflecting 2020 onwards,” said Nitin Seth, president, LCV, Ashok Leyland.

More than 600,000 LCVs are expected to be sold in local market annually in 2020. “Post GST, the hub-and spoke model is being put into play by transporters. While higher tonnage trucks are being used to move goods, LCVs are being used for last mile transport. In India, LCVs currently account for 64% of overall sales of commercial vehicles compared to 70% seen globally. There is a lot of room to grow”, added Seth.

Seth admits a spike in prices upon implementation of BS-VI emission standards will dampen demand temporarily. However, he points out that the same would be true across players in the local industry. Ashok Leyland is working on reducing costs and developing alternate fuel and electric versions of LCVs to keep prices viable for buyers. Ashok Leyland has capacity to produce 50000-55000 LCVs at its facility in Hosur, Tamil Nadu.

Ashok Leyland Limited