Ashok Leyland eyes one-third share of ICV market in 2 years

Hinduja Group flagship company and commercial vehicles major Ashok Leyland Ltd (ALL) is eyeing a one-third share of the intermediate commercial vehicles (ICV) market in the country within the next couple of years.

ALL, which is already in the process of expanding its international footprint through establishing manufacturing assembly sites, is also targeting one-third of its total volumes coming from foreign shores in the next five years.

The company has recently launched its ICV, Guru, and is banking on the model to help it garner a one-third market share of the 50,000 units market. It already enjoys a 20 per cent market share in the ICV market, which comprises vehicles in the 7.5 to 15 tonnes range. "The segment has been clocking a 10 per cent growth rate this year, and we expect it to grow further. Logistics and transportation in India is likely to grow following a hub and spoke model and this would further boost the growth of both the heavy commercial vehicle (HCV) segment – ranging between 40-49 tonnes – as well as the ICV segment," said Anuj Kathuria, president, global trucks, ALL.

"One-third of the market should be with us in about a couple of years," he said sounding upbeat.

Meanwhile, he explained that the company continues to focus on expanding its footprint in international markets as the Indian commercial vehicles space becomes more competitive with the entry of new players like Scania, Volvo, MAN etc. ALL enjoys over a 30 per cent share of the MHCV market in India, but Kathuria reasoned that the CV market is highly cyclical.

"Almost every four years, we see a downturn. In order to de-risk the company's overall growth during these downturn years, it is important that we reduce dependence on the domestic market. In the next five years, we see international operations contributing about one-third of our total volume sales. At present, it is around 13-14 per cent. We did around 110,000 units in FY16, including buses," he said.

This year, the volumes have been almost at similar levels.

The company already has assembly plants in UAE, Bangladesh and Sri Lanka. Kathuria explained that the capital expenditure in these units is not necessarily borne by ALL alone. Depending on the local market and opportunities, ALL may go for partnership for expanding its assembly footprint. For example, the recently opened plant in Dhaka, Bangladesh, is in collaboration with IFAD Autos of Bangladesh, which has invested around Rs 75 crore in the facility. The Sri Lanka plant is in collaboration with the government of the country.

Kathuria said that there were plans to enter the West and East African markets, as well some Commonwealth of Independent States countries in the future.

The company has also recently launched a light commercial vehicle (LCV), Partner, and has plans to launch at least one product every quarter for the next two years.

In the recent past, Nitin Seth, president-LCV, ALL, had said that LCVs contributed around Rs 2,000 crore to ALL and he expected this figure to increase to Rs 6,000 crore in the next three to four years when LCV volumes are expected to touch around 150,000 units.