Commercial vehicle maker Ashok Leyland is better prepared to tackle the slowdown in the automobile business than in earlier instances as its debt position is significantly better now, company chairman Dheeraj Hinduja said.
“Between the last domestic economic downturn in 2013 and this downturn, we are better prepared,” Hinduja, who was in Chennai to showcase the company’s range of BS-VI vehicles early last week, said.
“We have increased our market share from 26 per cent in 2013 to 32 per cent now. Our debt levels have also lessened considerably. During 2013, we had high debt levels owing to the expansion of our portfolio to light commercial vehicles (LCV)s, which was draining cash from the company. So, this time, we are better prepared to ride over the downturn,” Hinduja said.
The contraction in the sales of commercial vehicles started with the introduction of the axle load norms in July 2018.
“The turnaround time of the vehicle increased, the number of trips increased, reliability of the vehicle increased and the uptime too increased, leading to lower demand,” said Anuj Katharia, chief operating officer, Ashok Leyland.
The long-haul vehicles of the company were affected the most as a result of the axle norms. “The intermediate commercial vehicles (ICVs) were least affected, the tippers are also doing well because of infrastructure projects. However, the mobilisation of projects is yet to happen and with the late monsoons, the economy should turn around,” said Katharia.
The bus segment has seen a growth of around one per cent owing to orders from state governments.
With liquidity improving and dealer stock reducing, the company is hoping on some pre-buying before the BS-VI norms kick in.
“It hasn’t happened so far. If it does, then much of our inventory levels will come down,” said Katharia.
Along with the new BS-VI engine, the company is introducing a common modular platform for its commercial vehicles as well as buses.
“There will be significant cost reduction because of the modular platform and it will also help us to meet customer requirements with multiple options of loading spans, cabins, suspensions and drivetrains,” said Katharia.