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‘Ashok Leyland to combat local downcycle with global growth’

In October, its domestic sales halved to 4,565 vehicles.

, ET Bureau|
Nov 05, 2019, 10.10 AM IST
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Agencies
ASHOK-LEYLAND
Leyland, among a clutch of other vehicle makers, is in the grip of a sales downturn in India.
Ashok Leyland is negotiating the current phase of slowdown in India with fewer financial handicaps and more room for growth in the international market than during the last downturn, chairman Dheeraj Hinduja said.

The commercial vehicle maker is gearing up for an entry into Russia and push its trucks in key African markets by leveraging a new modular platform the company unveiled on Monday at its technical centre near Chennai. The Hinduja Group company is resting its global plans on this platform, which meets Bharat Stage-VI emission standards and integrates three architectures it previously used for BS-IV vehicles. The company expects to start production of BS-VI vehicles by January and the new platform will make combinations easier than before.

“In quite a few African markets where we have been selling buses, with our modular range we will now have left-hand drive units too. So, we can sell more in the Middle East and of course continue to sell in Saarc and Asean nations like Indonesia and Malaysia,” Hinduja told ET.

The Chennai-based truck and bus maker is betting big on the light commercial vehicle segment, a business segment it has turned around after buying out joint venture partner Nissan about three years ago. Hinduja said the LCV segment, in which the company holds a market share of 18.5 per cent in India, was set to have a slew of launches in the next financial year, built a platform in the works. “We took a decision about 18 months ago that we need to expand this business. As a result, you will see around March the announcement about a new range of LCV products.”

Leyland, among a clutch of other vehicle makers, is in the grip of a sales downturn in India. In October, its domestic sales halved to 4,565 vehicles.

The company had anticipated buying to pick up as most BS-IV vehicles are now available at a discount ahead of the April 2020 transition to BS-VI standards, but that has not happened yet.

Hinduja said he still would not rule out a surge ahead of the transition should the government hammer out a scrappage policy for vehicles before the end of the current year. The country has 9 lakh trucks in the age of 15-25 years, according to Kotak Institutional Equities.

Hinduja predicted the downturn in the domestic commercial vehicle segment to turn around by September 2020. “This industry is cyclical. This year would have been the normal downturn year anyway. We need to be better prepared for such eventualities,” he said, adding: “As and when the next recession comes, we will not be overly dependent on the MHCV (medium and heavy commercial vehicle) segments.”

For the future, Ashok Leyland is looking at expanding into business opportunities in the services and solutions segment adjacent to core manufacturing, such as tyre replacements and insurance. A McKinsey report recently said a third of businesses for manufacturers such as Ashok Leyland could come from the solutions region in the next decade.

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