Ashok Leyland sales drop after 24 months of sustained growth

Ashok Leyland, the second largest commercial vehicle maker in India after Tata Motors, has reported a drop in its overall commercial vehicle sales after nearly 24 months of sustained growth.

In July 2016, the company sold 10,492 units (July 2015: 11,054 units), registering a drop of 5%.

Its medium and heavy commercial vehicles (M&HCV), a segment which has seen strong recovery since the past two years, also slipped during the month. The company sold 8,182 units, down 7% (July 2015: 8,835). However, its light commercial vehicle sales remained in positive territory and grew marginally by 4% with sales of 2,310 units (July 2015: 2,219 units.)

For the April-July 2016 period, Ashok Leyland has seen single-digit growth in its overall sales which rose 6 % at 41,657 units (April-July 2015: 39,208 units). M&HCV sales are up 6% at 32,209 units (April-July 2015: 30,288) while LCV numbers are also up 6%, at 9,448 units (April-July 2015: 8,920 units).

Despite the drop in its July sales, Ashok Leyland’s outlook for this fiscal year remains robust as the company expects the M&HCV segment to drive growth as a result of increased infrastructural activity by the Central government across the country.

In what is a big boost to its bus sales, Ashok Leyland, earlier this month, has announced that it has received orders for nearly 3,600 buses from various State Transport Undertakings. These orders are to be executed in the current financial year and will further increase the company’s market share in the heavy buses segment where it is currently segment leader.

The overall M&HCV segment, which posted over 30% growth in 2015-16, is likely to see 12-15% growth in 2016-17. It is also projected that the LCV segment, which has seen sluggish sales over the past two years, is likely to grow 10-12 percent and give new momentum to overall CV sales. Also, the second half of this fiscal should be very good for CV manufacturers due to pre-buying as a result of BS-IV norms coming into play from April 2017.

In a positive sign, the heavy tippers including those in the 25T, 31T and 37T category, are primarily used in road construction activities and recent projects awarded by the government has seen their sales surge. The partial lifting of ban on mining activities has also given a boost to tipper sales.

In its monthly update, rating agency ICRA says, the sharp decline in growth momentum of appears to be an aberration and is likely to get corrected over the fiscal with expectation of healthy growth outlook from various end-user segments, especially infrastructure and mining.

Also read: Ashok Leyland to supply 3,600 buses to STUs in 2016-17