Ashok Leyland on Tuesday took its first step into the high-volumes business of light commercial trucks, unveiling its 1.25-tonne payload vehicle, christened ‘Dost'.

The commercial launch of Dost will happen around June. Ashok Leyland will disclose the price closer to the launch date.

The vehicle is powered by a 55 hp, 3-cylinder, turbo-charged common rail diesel engine and in informal discussions, Ashok Leyland's officials say that the truck is built to take overloading.

The LCV is produced under a joint venture of Ashok Leyland and Nissan, in which the Indian company holds 51 per cent stake. However, the ‘Dost' will be sold as an Ashok Leyland vehicle through the company dealership network. Next year, the joint venture will launch a Nissan LCV and the year after, again, an Ashok Leyland LCV. Till such time as the joint venture sets up a greenfield manufacturing facility at Pillaipakkam near Chennai, (Dost and the other) Ashok Leyland vehicles will be produced at the company's plant at Hosur, while the Nissan truck will be at Nissan's car plant at Oragadam, also near Chennai. The JV will therefore produce vehicles on three distinct platforms in the 3.5 tonnes to 7 tonnes range (in terms of gross vehicle weight.)

Such an arrangement was made, in revision of the original plan, in the aftermath of the global recession of 2008, to pare upfront investments. The joint venture has managed to bring in the product with half the originally planned investment of Rs 2,300 crore. Between them, the LCV lines at the two plants can produce 1,50,000 vehicles.

Addressing a press conference here, Dr V. Sumantran, Executive Vice-Chairman, Hinduja Automotive Ltd, observed that the Indian LCV market was growing “phenomenally”, at 25 per cent. In the period between April 2010 and February 2011, some 2,43,000 vehicles with gross vehicle weight of less than 3.5 tonnes were sold.

Ashok Leyland has no ambitions to enter the “sub-tonne” segment (an area today dominated by Tata Ace.) “I know that segment very well. It is overcrowded,” said Dr Sumantran who, in his earlier employment at Tata Motors, oversaw the conception and launch of the Ace.

New business for Ashok Leyland

Although Ashok Leyland has been a truck maker for half a century, selling LCVs —that are mostly used in intra-city logistics typically to carry vegetables, fruits, fish, water bottles and the like — is a new area for it.

Selling big trucks is a different ballgame altogether. The buyers are typically large fleet operators who are sophisticated businessmen, armed with sufficient financial muscle. While the number of medium and heavy duty trucks sold may grow year after year, the set of purchasers is rather the same. Most of the medium and heavy duty truck makers vie for a share of this pie.

LCV buyers are typically first-time entrepreneurs for whom the vehicle is the office place as well as the source of livelihood. “They have a tremendous amount of affinity to the vehicle,” Dr Sumantran said.

The customer profiles of the big and small trucks are starkly different and so must be the way they are sold. Thus, the LCV segment is a completely new line of business for Ashok Leyland, even though the company has been a truck manufacturer for decades.

On the NSE on Tuesday, Ashok Leyland's Re 1 share closed at Rs 56.55, which was Rs 0.35 lower than the previous close.

(This article was published on March 29, 2011)
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