Ashok Leyland expects commercial vehicle industry to grow at fast pace

Hinduja group flagship Ashok Leyland expects the commercial vehicle industry to grow at a fast pace in the coming quarters, with economic activity gaining momentum and demand picking up across segments, according to a senior company official.

The Chennai-based company, the second-largest player in the commercial vehicle space, expects both its domestic sales and overseas shipments to remain robust in the remaining part of the fiscal.

"I believe so because the pandemic and some of the uncertainties that were there globally are now all behind us. There is no reason why the commercial vehicle industry should not grow," Ashok Leyland Whole Time Director and CFO Gopal Mahadevan told PTI in an interaction.

 

He was replying to query whether the worst is behind the commercial vehicle industry, which saw sales dip in the last few years on account of regulatory changes and low offtake during the pandemic period.

"The commercial industry will grow with trucks and buses expected to do well... truck sales will improve as many industries would require more units as they are running at full capacity," Mahadevan stated.

Besides, with the Covid impact waning and schools, colleges and offices opening up, it would lead to a rise in intercity and intracity travel, aiding the sale of buses, he noted.

"So, bus sales should also go up. Also, light commercial vehicles will grow because there has been a disruptive change in behaviour and consumer patterns. E-commerce has grown...So, what's happening is that e-commerce will become a big driver, and last-mile delivery will become very, very important," Mahadevan said.

On the outlook for the exports, he said that the company expects dispatches to grow in the current financial year compared to FY22, with the demand scenario improving across markets.

The company shipped out around 11,000 units last fiscal and expects to improve the tally in the current financial year.

"So, we are positive. We have some challenges in Sri Lanka, which hopefully will get sorted out. But the rest of the SAARC market is slowly warming up. And we are expecting our experts to export to grow higher than last year definitely," Mahadevan stated.

The company, which exports mainly to SAARC, the Middle East and Africa, also expects better dispatches this year on account of an improved product range that is well suited for customer requirements outside the country, he added.

Mahadevan noted that the company has been "astutely managing" the chip shortage issue to lessen the impact on production and cater to enhanced demand.

"Even now, it does pose a challenge, and the manufacturing teams are working round the clock to manage it," he added.

The supply has definitely improved but is yet to reach a normal level, Mahadevan noted.

"Hopefully, in the next couple of years, we will see a lot of capacity coming up, which would be helpful for the industry," he noted.

When asked about the prospects of electric mobility, Mahadevan said: " Definitely it is the focus area for the future...the adoption of electric vehicles is much faster than what we thought".

It will be adopted at a fast clip across the LCV and bus segments while the heavy commercial vehicle vertical would take longer to encompass the change, he added.

"India typically is a very fast adopter of technology... So, we will see the same adoption happening but as a country, we would need to look at the overall infrastructure for charging. You know, because there's no point in saying that we'll have an electric cell which will, you know, be charged with power generated from coal," Mahadevan said.

So, there should be more green energy that is available to charge these electric vehicles, he added.

Besides, there needs to be some uniformity as regards to the charging stations, Mahadevan said.

"So all of this can be worked out. It's not very difficult," he added.

Elaborating on the company's strategy, Mahadevan said it has received robust orders for electric buses from various states.

"We are also not going to randomly pick up orders for the sake of it. You know, orders should be sensible, they should be executable. They have to be profitable. So, we are ensuring that we are pursuing business very methodically," he noted.

Bullish on the future of green mobility, Ashok Leyland has lined up a Rs 500 crore investment to develop powertrains based on alternative fuels like CNG, hydrogen and electric for its commercial vehicles range.

The company has already announced a USD 200 million (nearly Rs 1,500 crore) investment through its UK-based arm Switch Mobility for electric mobility.