Companies

Ashok Leyland plans up to 15 days of no production

G Balachandar Chennai | Updated on October 05, 2019 Published on October 05, 2019

Ashok Leyland’s Hosur plant. The company has been announcing production cuts for the past 3-4 months due to poor truck sales on the back of a slowdown in core sectors

Ashok Leyland’s move aimed at aligning production with subdued demand for CVs

Truck and bus maker Ashok Leyland has said its factories will have two to 15 non-working days this month. The non-working days will be observed in order to align its production with sales, according to a company statement.

Asked about the production cut schedule for various factories in October, a company spokesperson said he had no information on that.

The Chennai-headquartered company has been announcing production cuts for the past 3-4 months due to poor truck sales on the back of a slowdown in core sectors. Last month, it had at least two weeks of no-production at its Ennore factory in Chennai and Pantnagar unit in Uttarakhand, while its other units — at Hosur, Alwar (Rajasthan) and Bhandara (Maharashtra) — had suspended production for more than seven days.

Ashok Leyland’s decision reflects the continuing slump in demand in the sector despite the onset of the festival season.

 

 

During September, truck volumes remained depressed, dragging down the overall M&HCV (medium and heavy duty commercial vehicle) performance across the board. Market leader Tata Motors’ domestic CV volumes fell 47 per cent, while Ashok Leyland registered a 55 per cent decline in total CV volumes, with M&HCV falling by 67 per cent.

VE Commercial Vehicles’ volumes decreased by 43 per cent while that of Mahindra also saw a decline of about 18 per cent.

Wholesale offtake of goods-carrying CVs is estimated to have fallen 40 per cent year-on-year last month. Freight rates for M&HCVs have been under pressure for the past few months, indicating lower utilisation levels for trucks.

Additionally, transporters shied away from purchases in the first half of September in anticipation of a GST cut, according to Hetal Gandhi, Director, CRISIL Research.

The demand for light commercial vehicles (LCVs), too, fell, although not as significantly as their heavier counterparts, due to a slowdown in private consumption and weak finance availability despite a festival build-up.

However, there was some respite on the freight rate front. Truck rentals increased by 3-4 per cent during September on account of improved cargo flow due to the festival season.

But the cargo outlook is bleak due to poor manufacturing output and slowdown across sectors. With no load to carry, the trucking industry has been battling with a huge unutilised fleet.

Published on October 05, 2019
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