New Delhi, Feb 17 (PTI) Ashok Leyland is eyeing a strong comeback this year as it looks to consolidate its position in the intermediate commercial vehicle (ICV) segment, reap benefits of enhanced demand for its modular AVTR range and bolster exports to new destinations across the globe, as per a top company official.
The Hinduja flagship is also betting on the overall improvement in the economic situation and gradual easing of supply chain issues to cross 30 per cent of the overall market share in the commercial vehicle (CV) segment in 2022-23.
Having endured a few very tough quarters, the commercial vehicle major’s overall market share hovers around 24-25 per cent. In an interaction with PTI, Ashok Leyland Executive Chairman Dheeraj Hinduja noted that the company is making efforts to increase its presence in the ICV range.
“ICV has not been our strongest area and our market share in that domain has been 20-21 per cent as compared to other segments like MAV tractors where we are always plus 30 per cent,” he said. Hinduja said the share of ICVs, which used to constitute 21-22 per cent of the overall industry volumes, has now grown to 33 per cent. “So, naturally, this has affected our market share as well. Within this ICV segment, CNG has grown a lot with around 40 per cent of volumes coming from CNG,” he added.
The company has already launched several relevant products for the market – Ecomet Star CNG, multi axle vehicles, tippers; besides more CNG products are set to be introduced in the coming months, Hinduja noted. “So we are now feeling very confident that month-on-month our market share has been improving, in fact in January we closed at 28.8 per cent. So, with the products that we have already launched and the new products that we are launching, and this CNG and ICV, I think the team as a whole feels very comfortable that we will get back to our market share of over 30 per cent (in 2022-23),” he said.
Moving ahead, the gradual improvement in the chip supply situation is also going to have a positive impact on the light commercial vehicle (LCV) vertical which has been impacted the most by the shortage, Hinduja said.
“Going ahead, it’s very much looking now to be on an upward trend. So, if there are no more COVID issues, I think we are now in an upward cycle, and the demand seems to be picking up strongly, compounded with the infrastructure growth that is happening (and construction). Passenger buses have had a setback as a result of closure of schools and work-from-home. Now, this also seemed to be coming back once again,” he stated.
Passenger bus is the company’s forte as it has been the leading player in the segment, Hinduja noted.
“So, we are strongly looking forward to the industry as a whole both from trucks and buses to be reviving quite strongly in the next few quarters. So, I would say I am very optimistic going forward for not only the industry but for Ashok Leyland with expectations of not only gaining the market share but improving our bottom line as well,” he added.
The company reported a profit of Rs 6 crore for December quarter vis-a-vis a loss of Rs 83 crore in Q2 FY22 and a loss of Rs 19 crore in Q3 FY21.
Hinduja noted that there is a huge pent-up demand in the CV segment as there were 8 quarters of de-growth for the industry and the average age of vehicles is at an all-time high of 9-9.5 years – and replacement demand is expected to kick in sooner than later.
He added that the company’s light commercial vehicle sales have been affected the most due to the semi-conductor shortage and said that it expects situation to improve in the coming months.
“The semiconductor issue has impacted the entire automobile industry. The industry is now reviving strongly. Its (shortage) has been an issue for all of us. Specifically for Ashok Leyland we have had some tough quarters. The third quarter (October-December 2021), I feel is defining the change for us,” Hinduja stated.
On the outlook for the medium and heavy commercial vehicle (M&HCV) segment, he noted that there’s a direct correlation between the country’s GDP and the growth of this segment.
“So as a result, it is looking that the growth is going to be there across the board in M&HCV segment,” he added.
The company also expects its exports to pick up further aided by a new range of products and a highly modular AVTR range, Hinduja said.
“We are more ready than ever to address the export markets with the right set of products this time. We now have a full range of left hand drive and right hand drive products. The SAARC, Middle East and Africa are going to be the focus markets for us. We are appointing large distributors in Africa and tying-up with international banks for financing,” Hinduja said. The local teams in these geographies are in place and will operate as per the dynamics of the respective markets, he added.
On tackling semiconductor shortage issues, he said: “It is not easy to overcome the limitations that are there, but you know, this has now been going on for over the last one year. And the manufacturers themselves have been ramping up their capacities. So, the indications that we have been given is that by the second half of 2022, we should see a significant improvement in availability.” The situation is expected to definitely ease in Q1 of 2023, Hinduja said. “So, yes, there might be slight difficulties during the course of the initial part of 2022. But indications are definitely that the availability is improving,” he noted. PTI MSS ANU ANU
