Ashok Leyland plans to enter the sub-two tonne mini-truck segment and challenge rivals Tata Motors and Mahindra & Mahindra

Ashok Leyland, the country's third largest commercial vehicle maker plans to be a full range player in the fast-growing light commercial vehicle space. Addressing the investors on Thursday, Shenu Aggarwal, MD and CEO of Ashok Leyland said that the company plans to enter the sub-two tonne space and grow its presence in the 2-3.5 tonne segment.

The company has so far been absent from the sub-two tonne segment which holds 35 percent of the overall light commercial vehicle space. This move will enable it to tap into this sub-segment.

Its sub-two tonne truck will take on the likes of Tata Intra and Mahindra's Bolero pick-up truck. Meanwhile, the 2-3.5 tonne Dost Truck continues to enjoy a fifth of the market despite stiff competition from Mahindra's pickup trucks.

The company's presentation did not share any timelines on the launch of the sub-two tonne truck. Aggarwal however said that the company plans to grow its market share in the 2-3.5 tonne segment to 25 percent and the company also plans to launch an electric product in FY24.

The company had posted highest ever volumes in FY23 since its inception and it moved to the Number Two position in the 2-3.5 tonne segment.

At the end of FY23, Ashok Leyland catered to only 50 percent of the addressable light commercial vehicle market, it will increase to 60 percent by the end of FY25 and further increase to 80 percent post 2025.

The 5.5 lakh unit light commercial vehicle market is sub-segmented into three segments — the 0-2 tonne which accounts for 35 percent of the LCV segment. The 2-3.5 tonne segment, which is 59 percent of the LCV segment with annual volumes of 3.28 lakh units and 3.5-7.5 tonne segment, which is six percent of the LCV market accounting for 34,000 units of sales in FY23.

Expanding International Business
Ashok Leyland wants to double its international business by progressively entering into more sophisticated markets with the new range of products offering three levels of sophistication, the company said.

With expansion of product range, the company can participate in 2.5 lakh units addressable markets of SAARC, Africa and GCC, Asean, CIS and North African market.

In the last couple of years, Ashok Leyland has added 10 more countries in West Africa and Southern Africa offering its trucks and buses to 38 countries. The country wants to expand to 50 countries in the next few years, thereby doubling its addressable market.

The company has nine international assembly locations — Morocco, Ghana, Kenya, Senegal, Nigeria, UAE, Ukraine, Sri Lanka, Bangladesh to offer competitive products with low import duty.

Growing non-CV business
To tide over the cyclicality of the commercial vehicle market, Ashok Leyland has been steadily building its non-commercial vehicle business, by strategically participating in the defence mobility space, growing the aftermarket business and the power solution business.

Aggarwal, in his presentation, stated that the company has built capability on the defence front and there is a significant top-line growth potential and the aftermarket business, which has doubled in the last five years to Rs 2,000 crore.  This could potentially double again in the future, as it will aggressively push the asset management business.