Exports put on hold due to strong domestic demand

As sales of its best-selling light commercial vehicle Dost gather speed, Ashok Leyland could face problems keeping up production.

The 2.5-tonner from the Leyland-Nissan joint venture, which completes one year in the market, has seen a steady climb in sales — from 210 units in the first month to 2,800 last month.

With an average waiting period of two months, Ashok Leyland is just about managing to keep pace with the domestic demand, said V. Sumantran, Chairman, Nissan Ashok Leyland Powertrain. “So much that there has been a delay in our export plan. We will look at exports only in the next financial year.”

Dost is being manufactured at Ashok Leyland’s commercial vehicle plant in Hosur, Tamil Nadu.

The LCV line is expected to ramp up to peak production of 55,000 units in the next financial year.

Meanwhile, Ashok Leyland is putting up an exclusive LCV plant outside Chennai, near Sriperumbudur. But the plant, spanning 280 acres, is expected to be ready only in two-and-a-half years.

Sumantran said the company is “still working” on ways to tackle the production constraint that could arise in the intervening period if demand goes up.

Currently, two shifts operate at the Hosur plant. But it is not clear whether the company would rejig operations or add shifts to meet the shortfall.

Ashok Leyland has sold 20,479 units of Dost since its launch a year ago, cornering market share of 31 per cent in the eight States it operates in (Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, Maharashtra, Gujarat, Rajasthan and Goa).

Its national market share in the 2-to-3.5-tonne pick-up truck segment is 21 per cent, ranking second behind Mahindra Bolero. (Others in the segment are Tata Super Ace, Tata 207 and Mahindra Genio.) “We have done this without offering discounts,” said Nitin Seth, Executive Director – LCV and Defence.

Said Sumantran: “We found someone using Dost on a Hyderabad-Delhi road trip, something never expected of an LCV. We also have a woman entrepreneur ferrying vegetables from Salem to Hosur.”

LCVs post strong growth

Light commercial vehicles are weathering the economic downturn better than medium and heavy vehicles.

According to the Society of Indian Automobile Manufacturers, the commercial vehicles industry grew 4.57 per cent in April-August 2012 over the same period last year. While sales of medium and heavy commercial vehicles (MHCV) slid 11.94 per cent, LCVs (up to 7.5 tonnes) grew 17.05 per cent.

Ashok Leyland’s commercial vehicle sales (excluding Dost) dipped nine per cent to 6,597 units in August. Total sales in August, including Dost, rose 30 per cent to 9,432 units.

“There is a lot more headroom for LCVs in the next decade. But Ashok Leyland will continue to depend on MHCVs as per unit revenue is higher in this case, with a price range of Rs 10-45 lakh compared to Rs 4 lakh in the case of Dost,” said Sumantran.


(This article was published on September 11, 2012)
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