Growth In Commercial Vehicle Sales To Help Ashok Leyland Spur Its Business
Increasing sales of Medium and Heavy Commercial Vehicles (MHCV) in the last five months have been a resulted positive for Ashok Leyland. Ashok Leyland is the only pure commercial vehicle company in the country. In the last three months, its share has risen to 26% in the fragile market.
The growth of the MHCV segment was 23% in February. It was much higher than the expectations of analysts, who gave the estimate of 12% growth. According to the Society of Indian Automobile Manufacturers, volume between April 2017 and February 2018 increased by 18% to 294,553 units.
Light commercial vehicles (LCV) segments are also increasing in growth. The LCV volume increased by 24.6% to 4,53,221 units in the first 11 Months of the current fiscal year.
This volume growth is being received by new tenders on the basis of swift infrastructure development, coal movement, petroleum and car carriers. Among the obstacles related to supply, the inventory level of commercial vehicles remained low.
Volume growth can be sustained in the coming period due to pre-existing demand, lowering of base effect, overloading by state governments and implementation of scrap policy. This can lead to the growth of the industry’s growth forecast. Analysts expect that in the financial year 2018, the MHCV volume growth could be 15% and in the financial year 2019, it will be 8%.
Another positive factor is that in March, freight rates increased by 8 to 9%. The increase in diesel prices is more than 4-5% increase. This can improve the profitability of freight operators, which will support MHCV volume growth.
Ashok Leyland’s market share is 57.5% in the case of 32.2 Tonnes and more capable vehicles. Considering the strong volume, the company raised prices by 1 to 2% in January this year. The contribution of truck business in the total income of the company is approximately 75%.