As the vehicle scrappage policy took effect this month, leading truck and bus maker Ashok Leyland (AL) has secured a big order from VRL Logistics to supply 1,560 trucks for an undisclosed sum as the latter seeks to expand and modernise its fleet by replacing old trucks.

As of March 31, 2023, VRL Logistics owned 5,717 units of goods transport vehicles. As part of its fleet expansion plan for FY24, VRL Logistics has planned to add a total of 1,667 trucks to its fleet. While AL will supply 1,560 trucks, Tata Motors will supply the remaining 107 trucks.

Scrappage policy

“With the announcement of the vehicle scrappage policy by the government, VRL is planning to modernise its current fleet with the capability to address growth in the near future. The order will be executed by March 2024,” Sanjeev Kumar, President-MHCV, Ashok Leyland, told businessline.

VRL indicated that the ongoing implementation of the Vehicle Scrapping Policy announced by the Government of India entails the company replacing its existing older vehicles. In FY24, the company is likely to withdraw around 1,220 vehicles that are more than 15 years in operation.

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VRL Logistics has planned a total capex of ₹697 crore in FY24 for its fleet expansion and modernisation. The capex includes the cost of the chassis at list prices, bodybuilding, registration, insurance, and a margin for contingencies, according to information provided by VRL.

The fleet expansion is expected to help VRL Logistics meet its business demand in due course and reduce dependence on hired vehicles. This would also cater to expected growth volumes in the near and medium terms.

VRL Logistics, which operates on a hub-and-spoke model, proposes to purchase truck chassis from Ashok Leyland Ltd. and Tata Motors and would construct the truck bodies in-house or outside as feasible.

The vehicles being added include rigid trucks and tractor-trailers. These trucks will be used across India in parcel and logistics applications. 

“These trucks will come fitted with the latest features and technologies, which will help VRL have a reduced maintenance time, a higher uptime, and hence greater operating efficiencies,” said Kumar.

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Growing demand

“We have been seeing a growing demand for commercial vehicles in the last few quarters and expect a very robust year going forward. This has been driven by increased government Capex expenditure, macroeconomic tailwinds, and replacement demand. We are seeing a move towards higher-tonnage vehicles, which is a clear indicator of improved demand,” he added.

Over the years, Ashok Leyland has supplied more than 5,700 trucks, including 500 units in FY23, to VRL Logistics.