Ashok Leyland, after buying out Nissan's stake in the three LCV ventures, has shifted its gear to overdrive to tap new avenues that weren't available earlier as well as to make up for the opportunities lost due to the litigations with its former partner.
Following the dilution of the joint venture, Ashok Leyland is free to tap any market across the world. Under the agreement with Nissan, the LCVs could be exported only to SAARC countries which restricted the development of new variants.
As new opportunities open up, Ashok Leyland has started developing a left-hand-drive (LHD) version of its LCVs. It is also adding higher safety features and more powerful engines to its LCVs to enter markets which are India-like but with a LCV segment that is more matured.
All efforts are to prepare and ship these vehicles soon, as successful tapping of the opportunities will yield big results for the company.
"The global market for these range of vehicles in the markets, which are closer to India, is anything upward of 500,000 units," says Nitin Seth, president – LCV & Defence (pictured above). Export of LHD vehicles is likely to commence in six months.
Re-engineering existing models under the full ownership of Ashok Leyland won't be a big challenge as the engineering team of the JV has been integrated with Ashok Leyland's team of 170 engineers focused on LCVs. The JV had a team of 250 Indian engineers. Fifty members of the team had left, and Ashok Leyland is bringing at least some of them back.
A good number of the new products, starting with the new Guru and Partner, will have a Nissan link. The challenge, however, will be to develop all-new products in-house. Seth doesn't see it as a big challenge as he points out that even the Dost, which helped his company to enter the LCV space, has been heavily modified to meet demanding Indian market and road conditions. For example, the original version of the Dost came with independent suspension but it was replaced by a rigid suspension to cater to the rough road, and sometimes overloading, conditions.
Ashok Leyland's LCV business has reportedly lost nearly Rs 800 crore. Under its full ownership, it is investing Rs 400 crore to grow the business. With the newly launched products and a new launch every subsequent quarter in the domestic market, and the entry into new markets, Seth expects the LCV business to wipe out losses and be in the black in three years.
Whatever the product, Seth wants it to play the value game which has helped its sole LCV Dost sustain its presence in the domestic market. He claims that despite the tough period when the LCV JV was in a limbo, the Dost held onto its segment market share of around 15 percent despite being the most expensive and least discounted product. "You give a better product with a marginal increase in price, and people tend to shift. The Dost never fought a price war, it fought a value war," says Seth. The 2.5-tonne Dost, launched in 2011, offered 50 percent more load-carrying capacity and its cost was 20 percent more than the Tata Ace.