Ashok Leyland expects turnaround in CV business, 30% market share in FY23

Hinduja flagship Ashok Leyland is eyeing a strong comeback in the commercial vehicle segment this year as it looks to consolidate its position in the intermediate commercial vehicle (ICV) segment and reap benefits of enhanced demand for its modular AVTR range, according to a top company official.

The Chennai-based company is also betting on overall improvement in the economic situation and a gradual easing of supply chain issues to cross 30 per cent market share in the commercial vehicle (CV) segment in 2022-23.

Having endured a few very tough quarters, the commercial vehicle major has seen its overall market share hovering around 24-25 per cent. In an interaction with PTI, Ashok Leyland Executive Chairman Dheeraj Hinduja noted that the company was 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 tractors where we are always plus 30 per cent," he noted.

Hinduja stated that the share of ICVs, which used to be 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 just recently launched CNG models in the segment, 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 vertical which has been most impacted by the shortage, Hinduja said.

"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 After Tax (PAT) of Rs 6 crore for the December quarter vis-a-vis a loss of Rs 83 crore in Q2 FY22 and a loss of Rs 19 crore in Q3 FY21.

"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.

On tackling semiconductor shortage issues, he said: "It is not easy to overcome the limitations that there are, 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.