Ashok Leyland eyes big revenues from aftermarket with digital move

It is estimated that the overall expenditure in purchasing, operating and maintaining a Rs 20 lakh truck, over a 10-year period, adds up to Rs 3.5 crore! In this whole equation, Ashok Leyland earns only Rs 20 lakh and a little more because most customers, more often than not, do not visit Ashok Leyland service centres for vehicle maintenance.

Obviously, Vinod Dasari, managing director, Ashok Leyland, is not happy with this scenario. With the company’s new 'Digital Market Place' – a combination of four smartphone applications – he expects to earn much more than just the money from selling the vehicle. Ashok Leyland expects to earn Rs 1,000 crore in the next three years, to begin with.

The bouquet of free applications consists of one each for tracking the vehicle's location and health, diagnostics and instructions for repair, service by mechanics registered with Ashok Leyland, 24x7 availability and doorstep delivery of spare parts. "These initiatives will be a growth driver for us and will take us closer to our goal of achieving one-third of our revenues from the aftermarket business," says Dasari.  He feels the Rs 1,000 crore figure could be conservative as the potential is much more. The addressable commercial vehicle aftermarket size is pegged at Rs 12,000 crore.

Ashok Leyland currently earns around 5 percent of its sales revenue and 8 percent of profits from the aftermarket business. The number is much higher for some other CV makers. For example, American truck maker Paccar earns 25 percent of its annual revenue and 30 percent of total profits from the aftermarket. With the new move, Ashok Leyland aims to enhance its business by helping its customers to manage and maintain their trucks better.

Digital mechanic
The applications called iAlert,  e-Diagnostics, Leykart and Service Mandi are compatible with all BS IV vehicles of any brand. Older vehicles can also be retrofitted with the technology for them to be connected to the applications.

Ashok Leyland has already connected over 2,000 mechanics to the Service Mandi app. A smart move as most truck owners go to their neighbourhood mechanics for servicing their trucks. One of the reasons for it is also the density of unorganised workshops.

Dasari says that in many areas the average distance between an authorised workshop is 100km whereas the same between two regular workshops is only 3.5km. With the new digital applications, customers can now book the service of a mechanic (with rating by company according to skill level) and can also order the necessary spare parts.

The pilot project for the 'Digital Market Place' has been kicked off with 50 customers. After a year or so, Ashok Leyland plans to offer the applications in export markets too.